The U.S. Department of Veterans Affairs (VA) is looking for more discounts from prescription drug manufacturers, but it likely will be a few years before the ask becomes reality as it will require congressional action and federal rulemaking.
The beneficiaries would be dependents and survivors of veterans who are covered through the VA’s Civilian Health and Medical Program (CHAMPVA) and who get their prescriptions at retail pharmacies. Currently, the so-called Big 4 drug discounts of at least 24% don’t apply to retail purchases under CHAMPVA. The VA wants to change that.
In a report released Tuesday, the VA Office of Inspector General (OIG) estimated that the department could save about $345.1 million over the next five years if the proper statutory authority, regulations and processes were in place for CHAMPVA to buy drugs through retail pharmacies at the Big 4 prices. The change also could provide savings for beneficiaries, who now have to share some of the cost of their retail prescriptions.
Big 4 prices reflect the discounts drug manufacturers are required to offer the VA, Department of Defense (DoD), Public Health Services and Coast Guard. Under the 1992 Veterans Health Care Act, those discounts only apply to covered prescription drugs sold and delivered to a facility operated by a Big 4 agency and dispensed directly to beneficiaries. However, in 2008, Congress extended the Big 4 pricing to retail pharmacies for prescriptions covered by the DoD’s TRICARE program. (It took two years to implement that change.)
Now the VA OIG is recommending the same congressional extension for CHAMPVA beneficiaries. In fiscal 2018, CHAMPVA paid $181 million in prescription claims, with about 40% of those costs covering retail pharmacy sales. The OIG found that CHAMPVA could have saved more than $3 million in 2018 for just three undisclosed drugs had Big 4 pricing been available at the retail pharmacy. The priciest of the three drugs had an average CHAMPVA price of $18,560, more than 66% higher than the Big 4 price of $11,161.
The OIG isn’t stopping with CHAMPVA. It also is advising that the VA consider pursuing the appropriate legal authority for all of its programs to purchase prescription drugs through retail pharmacies at the Big 4 prices.