Federal Government Still Striving To Establish Single Drug Procurement System

In a review of the prescription drug procurement activities of the Department of Defense (DOD) and the Veterans Administration (VA), their efforts and those of the Office of Federal Procurement Policy (OFPP) to establish and implement a uniform system for the procurement of drugs among federal agencies were examined. Such a system would eliminate duplication and reduce costs. Currently, drugs are bought centrally through each agency's depot system, through Federal Supply Schedule drug contracts, or locally from drug suppliers. An OFPP policy, which has guided executive agencies in this effort since 1977, requires the purchase of commercial off-the-shelf products when such products will adequately serve the government's needs and the government's use of commercial distribution channels in supplying these products. The commercial products policy relies on comprehensive market research and analysis to develop a suitable and cost effective acquisition strategy.

In June 1978, DOD and VA established a DOD-VA Shared Procurement Program. The incompatibility of the two major supply systems was highlighted when both agencies issued contracts under the program. On the whole, DOD, VA, and OFPP have made only limited progress in fully implementing the program. Consideration of issues related to the commercial products policy would improve the agencies' market research and analysis efforts and result in better acquisition strategies for federally managed medical materiel items. Individually, DOD and VA centralized drug procurement systems have attempted to use competitive means to buy drugs. However, the number of drugs which can be bought competitively has been limited. Several additional supply sources which could have been solicited had been overlooked. Both agencies procured the same prescription drug items at different prices. Additional savings could have been possible by substituting lower priced therapeutically equivalent drugs for other higher cost drugs currently stocked by DOD and VA. As of 1972, the practice throughout the government in procuring commercial products was to focus on the price paid for the item rather than on the total costs of procuring, stocking, and distributing the item. Failure to give consideration to total costs could result in a stronger preference for central stockage and issuance than may be justified. DOD and VA have recently given increased consideration to this overall concept in issues involving drug supply decisions.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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