Audit of Pharmaceutical Purchases Made Outside the Prime Vendor Contract

The VA Office of Inspector General (OIG) assessed whether the Veterans Health Administration (VHA) had adequate controls to ensure medical facilities complied with VA policies when making pharmaceutical purchases through the open market. VA spent about $11.7 billion on pharmaceuticals during the audit period, which was from April 1, 2024, through March 31, 2025. Of that amount, about $11.4 billion was purchased through the prime vendor contract and about $322.5 million—roughly 3 percent—was purchased outside that contract. VHA is required to use the prime vendor as the first source for all contract pharmaceutical purchases. The prime vendor is the main commercial distributor of a broad range of drugs and pharmaceuticals to VA and other agencies with a contracted pricing schedule that leverages the government’s buying power.

The team reviewed $276.7 million of the purchases made outside that contract, excluding purchases made through VHA’s Consolidated Mail Outpatient Pharmacies. The team found VHA facilities did not always comply with policy, which requires staff to document attempts to purchase pharmaceuticals through the prime vendor and conduct market research for cost-effectiveness before making open market purchases. Until VHA fully implements recent executive orders to enhance oversight of government purchase cards and ensures compliance with policy requirements, it will remain limited in its ability to ensure cost-effective purchasing, deter fraud, and safeguard taxpayer resources. VHA leaders generally agreed with the team’s findings and the under secretary concurred in principle with all three of the OIG’s recommendations and submitted action plans to address them.

The OIG’s recommendations seek to strengthen controls over open market pharmaceutical purchases and to ensure medical facilities monitor and evaluate these purchases to improve oversight, enforce policy, and reduce risks of waste or fraud.