May 31, 2013—The Department of Veteran Affairs (VA) and the Department of Defense (DOD) are paying different prices for the same prescription drugs, the Government Accountability Office (GAO) has found. However, the findings may not be that surprising considering the purchasing patterns of the two agencies, GAO researchers found.[ms-protect-content id=”2799″]
Comparing the prices paid by the VA and DOD for 83 specific drugs during the first quarter of 2012, the May 20 study found that the DOD on average paid 31.8 percent ($0.11) more per unit than the VA. For 11 of the 83 drugs, one agency paid at least 100 percent more than the other agency.
Breaking down the numbers further, the study found that the DOD paid more per unit for generic drugs while the VA paid more per unit for brand-name drugs. Each agency obtained better prices on the type of drugs they used most. Generic drugs accounted for 83 percent of the VA’s utilization and brand-name drugs accounted for 54 percent of the DOD’s. “These results were consistent with each agency obtaining better prices on the type of drugs that made up the majority of its utilization,” the GAO found.
Nonetheless, there are lessons to be learned from the analysis, according to the GAO. “DOD and VA face continued challenges in controlling drug costs. While the prescription drug market is complex and there are many factors affecting the prices DOD and VA are able to obtain for directly purchased drugs, differences in prices paid for specific drugs may provide insights into opportunities for each agency to obtain additional savings on at least some of the drugs they purchase,” the study concluded.
The DOD’s generic drug utilization rate of 46 percent is well below the national average of 84 percent. But, the DOD noted that it obtains many brand-name drugs below the prices for generic equivalents.
The VA and DOD both purchase drugs directly from manufacturers via wholesale distributors called “prime vendors.” The agencies dispense these drugs to beneficiaries through their medical facilities and pharmacies, including their mail-order pharmacies.
Sen. Tom Coburn (R-Okla.), the ranking member of the Committee on Homeland Security and Governmental Affairs, requested the study. The GAO said it will compare drug prices paid using other approaches and by other federal programs, including Medicare and Medicaid, in future work. It did not say whether it will examine prices paid by 340B covered entities.[/ms-protect-content]