VA Health Care:

Opportunities to Significantly Reduce Outpatient Pharmacy Costs

HEHS-97-15: Published: Oct 11, 1996. Publicly Released: Oct 11, 1996.

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GAO reviewed the Department of Veterans Affairs' (VA) provision of over-the-counter (OTC) medications, medical supplies, and dietary supplements to veterans, focusing on: (1) what OTC products VA pharmacies dispense; (2) how VA provision of OTC products compares with that of non-VA health care providers; (3) how much VA spends on OTC products and how much VA recovers through veterans' copayments; and (4) opportunities to reduce federal expenditures for OTC products.

GAO found that: (1) all VA pharmacies provide some OTC products that are available through other local outlets; (2) the most frequently dispensed OTC products were medications, dietary supplements, and medical supplies; (3) individual VA pharmacies offer a different assortment of OTC products; (4) some pharmacies restrict which veterans may receive OTC products or in what quantity; (5) other public and private health care plans cover few, if any, OTC products for beneficiaries; (6) in fiscal year (FY) 1995, VA pharmacies dispensed OTC products more than 15 million times at an estimated cost of $165 million, including $48 million in handling costs; (7) VA recovered about $7 million through veterans' copayments; and (8) to reduce the resources devoted to dispensing OTC products, VA could more narrowly define when to provide OTC products, more efficiently dispense OTC products and collect copayments, and further reduce the number of OTC products dispensed on an outpatient basis.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Matters for Congressional Consideration

    Matter: Congress could reduce federal expenditures for OTC products provided to veterans by amending 38 U.S.C. 1722A to lower the income threshold VA uses to determine which veterans owe medication copayments.

    Status: Closed - Not Implemented

    Comments: The Congress has not addressed this issue.

    Matter: Congress could reduce federal expenditures for OTC products provided to veterans by amending 38 U.S.C. 1722A to expand the coverage of the medication copayment to include medical supplies.

    Status: Closed - Not Implemented

    Comments: The Congress has not addressed this issue.

    Matter: Congress could reduce federal expenditures for OTC products provided to veterans by amending 38 U.S.C. 1722A to increase the medication copayment amount.

    Status: Closed - Implemented

    Comments: The Veterans Millennium Health Care and Benefits Act (P.L.106-117) gave the Secretary, Department of Veterans Affairs, authority to increase the amount of the medication copayment.

    Recommendations for Executive Action

    Recommendation: The Secretary of Veterans Affairs should require the Under Secretary of Health to require veterans to make copayments at the time OTC products are dispensed.

    Agency Affected: Department of Veterans Affairs

    Status: Closed - Implemented

    Comments: VA does not intend to require veterans to make copayments at the time OTC products are dispensed. However, VA has encouraged veterans to make copayments when OTC products are dispensed. VA will not deny a medically necessary product if, for some reason, a veteran can not make a copayment at the time the products are dispensed.

    Recommendation: The Secretary of Veterans Affairs should require the Under Secretary of Health to reduce VA dispensing costs for OTC products by: (1) providing, when appropriate, more economical quantities (more than a 90-day supply) of medications and supplies; and (2) limiting mail service to certain situations.

    Agency Affected: Department of Veterans Affairs

    Status: Closed - Implemented

    Comments: VA has taken steps to reduce dispensing costs by encouraging multi-month dispensing nationwide when appropriate. However, VA does not intend to limit mail service because it considers this to be a reasonable service that obviates the need for veterans to make time-consuming trips to the facility for the sole purpose of picking up OTC products.

    Recommendation: The Secretary of Veterans Affairs should require the Under Secretary of Health to standardize the availability of OTC products to give veterans more consistent levels of access to them systemwide.

    Agency Affected: Department of Veterans Affairs

    Status: Closed - Implemented

    Comments: VA directed the establishment of a national drug formulary (VHA Directive 96-063) that will standardize the availability of OTC products for veterans nationwide.

    Recommendation: The Secretary of Veterans Affairs should require the Under Secretary of Health to limit OTC products for nonservice-connected conditions to those most directly related to VA hospitalizations or those considered most essential to prevent hospitalization.

    Agency Affected: Department of Veterans Affairs

    Status: Closed - Not Implemented

    Comments: VA intends to take no further action. This is because VA does not believe that it can implement the recommendation uniformly among its 172 facilities.

    Recommendation: The Secretary of Veterans Affairs should require the Under Secretary of Health to direct facilities to apply the statutory income threshold to determine which veterans owe medication copayments.

    Agency Affected: Department of Veterans Affairs

    Status: Closed - Implemented

    Comments: In March 1997, VA issued a directive (VHA Directive 97-011) which required facilities to apply it to determine which veterans owe medication copayments.

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