Medical Facilities Forfeited Drug Return Credits through Inadequate Monitoring of Vendor Invoices

While auditing the Veterans Health Administration’s (VHA) prescription drug return program, the VA Office of Inspector General (OIG) determined that VHA is at increased risk for not receiving all drug return credits due before the national drug return vendor—Pharma Logistics—issues final invoices to VA medical facilities. In October 2020, VA ended its contract with Pharma Logistics. The vendor continues to process and issue final invoices to facilities as the drugs they returned become eligible for and receive manufacturer credit. The final invoice process will continue until at least April 2022. VHA medical facility pharmacies lost at least an estimated $2.1 million worth of drug return credits because pharmacy chiefs did not always effectively monitor or review job settlement statements before Pharma Logistics issued final invoices. In addition, although the vendor established a dashboard that provided information on the status of drug return credits at the facility level, it cannot provide a national report on all outstanding credits. This hurt VHA’s ability to maximize potential drug return credits and minimize the risk of lost credits. VHA will continue to be unable to ensure it is receiving all credits for drugs returned by medical facilities if pharmacy chiefs do not routinely monitor preliminary invoices, reconcile job settlement statements to identify outstanding credits, and request extensions to final invoices to allow additional time for credit processing. This risk will persist for any future drug return contract(s)—whether awarded nationally or locally—if the reimbursement structure remains the same. The OIG will continue its oversight work on prescription drug returns within VHA and plans to issue a full report, including specific recommendations. The OIG requests to know what action, if any, VHA takes to mitigate the potential risks identified in this memorandum and the outcome of those actions.