A Summary of Reviews in Fiscal Years 2022 and 2023 of Manufacturers’ Noncompliance with Veterans Health Care Act Provisions on Pharmaceutical Pricing

In line with the Veterans Health Care Act of 1992 (referred to in this report as the public law), the OIG conducts reviews to determine whether certain manufacturers (1) made all their covered drugs available at a discount to the government through a Federal Supply Schedule (FSS) contract and (2) correctly calculated and reported the drugs’ non-Federal Average Manufacturer Price (non-FAMP) on which the discount is based. The law helps ensure the government receives fair prices on pharmaceutical purchases. VA identifies covered drugs as those subject to the law that are commercially sold and approved by the Food and Drug Administration under a new drug application or biological licensing agreement. The reviews are not published because they contain sensitive commercial information. To promote transparency, this report summarizes the 15 reviews the OIG completed in FYs 2022 and 2023 to identify any instances of noncompliance with the public law. In conducting the individual reviews, the OIG teams evaluated non-FAMPs and related ceiling prices, late additions (items not placed on FSS contract within 75 days of being on the market), and failures to offer FSS-required price reductions that would have affected ceiling prices. Cumulatively, the OIG identified approximately $61.2 million in overcharges by manufacturers to the government. This amount includes approximately $27 million resulting from manufacturers’ noncompliance with the public law and about $34.1 million resulting from manufacturers’ violations of the price reduction clause in the FSS contract that were unrelated to the public law. VA has since collected approximately $59.3 million (about 97 percent) of the recommended amount from 11 of the 14 manufacturers. VA does not expect to collect overcharges from one manufacturer that filed for bankruptcy, and overcharges with two other manufacturers remained unresolved during the course of this review.