Ineffective Governance of Prescription Drug Return Program Creates Risk of Diversion and Limits Value to VA

Report Information

Issue Date
Closure Date
Report Number
20-00418-166
VISN
State
District
VA Office
Veterans Health Administration (VHA)
Report Author
Office of Audits and Evaluations
Report Type
Audit
Report Topic
Supplies and Equipment
Major Management Challenges
Stewardship of Taxpayer Dollars
Leadership and Governance
Recommendations
8
Questioned Costs
$0
Better Use of Funds
$0
Congressionally Mandated
No

Summary

Summary
The Veterans Health Administration (VHA) spent about $6.6 billion on prescription drugs in fiscal year (FY) 2019. Most were dispensed to veterans by medical facility pharmacies. VHA pharmacies can return drugs that become damaged or expire before use through a reverse distributor for credit or destruction. In FY 2019, VHA expected to receive about $52 million from drug returns. The VA Office of Inspector General (OIG) audited the prescription drug return program to determine if VHA was effectively overseeing the program to maximize benefits to taxpayers and ensure drugs waiting to be returned are not diverted or otherwise abused. The OIG found VHA pharmacy chiefs did not effectively implement the program and did not follow requirements in VA’s contract with the reverse distributor, Pharma Logistics. These issues increased the risk of drug diversion and ultimately put about $18.1 million at risk. Pharmacy chiefs did not always secure and track drugs held for return or complete required analyses to maximize returns. They also failed to meet contract requirements to return for credit only drugs due to expire within 120 days. VA’s National Contract Service and network contracting officers needed to do more to ensure contract terms were met. The Office of the Deputy Under Secretary for Health for Policy and Services and the Office of the Deputy Under Secretary for Health for Operations and Management did not effectively govern the program or communicate requirements to medical facilities. The OIG made eight recommendations, including ensuring medical facilities are properly securing and accounting for drugs set aside for return, minimizing the number of drugs returned while maximizing the value of returned drugs, and ensuring all offices and positions with defined responsibilities for the program or the administration of any future drug return contracts have the support and the authority to fulfill those responsibilities.

Open Recommendation Image, SquareOpenClosed and Implemented Recommendation Image, CheckmarkClosed-ImplementedNot Implemented Recommendation Image, X character'Closed-Not Implemented
No. 1
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 2/9/2022
The OIG recommends that the under secretary for health ensure that responsible VA medical facility personnel secure prescription drugs set aside for return credit either by following procedures outlined in VHA Directive 1108.07(1) or by adhering to a superseding policy.
No. 2
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 2/9/2022
The OIG recommends that the under secretary for health ensure that responsible VA medical facility personnel account for all prescription drugs set aside for return credit when they leave the medical facility either by following procedures outlined in VHA Directive 1108.07(1) or by adhering to a superseding policy.
No. 3
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 2/9/2022
The OIG recommends that the under secretary for health ensure that responsible VA medical facility personnel maintain inventory management practices to make sure drugs that are returned for credit are returned in a timely manner, so that medical facilities do not miss opportunities to maximize the value of their drug returns or reduce their risk of overspending to replace drugs prematurely returned for credit.
No. 4
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 4/1/2022
The OIG recommends that the under secretary for health takes steps to provide all offices and positions with defined national, network, or facility responsibilities for the drug return program or the administration of any future drug return contract(s), to include Pharmacy Benefits Management Services, Veterans Integrated Service Network pharmacist executives, network contracting officers, contracting officer representatives, and medical facility pharmacy chiefs, with the support, such as training, and the authority needed to carry out those responsibilities.
No. 5
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 9/21/2022
The OIG recommends that the under secretary for health makes sure that Pharmacy Benefits Management Services reviews the drug return contractor(s) data for accuracy, and uses this data to identify unusual reimbursement patterns and potential improvements for revenue recovery through the last invoices issued as part of the October 2018 Pharma Logistics contract, and for any future drug return contract(s); and coordinate with the National Contract Service on corrective action if inaccurate contractor data is identified.
No. 6
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 2/9/2022
The OIG recommends that the under secretary for health implements mechanisms to make sure that contracting officer representatives, if assigned, or Veterans Health Administration network contracting officers, provide oversight to ensure the contractor is performing in accordance with the terms of any future drug return contract(s).
No. 7
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 2/9/2022
The OIG recommends that the under secretary for health, to minimize the risk of errors, makes sure that Veterans Health Administration network contracting officers when writing task orders off any future drug return contract(s) use a template with terms that align with any future drug return contract(s) developed by the National Contract Service.
No. 8
Closed and Implemented Recommendation Image, Checkmark
to Acquisitions, Logistics, and Construction (OALC),Veterans Health Administration (VHA)
Closure Date: 2/9/2022
The OIG recommends that the under secretary for health coordinate with the VA Office of Acquisition, Logistics, and Construction’s principal executive director, who should develop a task order template with terms that align with any future drug return contract(s) and require the National Contract Service to disseminate the template to Veterans Health Administration network contracting officers.
Total Monetary Impact of All Recommendations
Open: $ 0.00
Closed: $ 14,907,365.00