VA Health Care

The Department of Veterans Affairs (VA) spent more than $1.8 billion to provide pharmacy benefits to veterans in fiscal year 1999. To help manage its pharmacy benefit, VA maintains a list of drugs--known as the national formulary--that its doctors are expected to use when prescribing drugs for veterans. VA provides free outpatient pharmacy services to veterans receiving medications for the treatment of service-connected conditions and to veterans whose income does not exceed the maximum VA pension, regardless of a drug's formulary status. Other veterans may be charged $2 for each 30-day supply of medication. This report discusses how VA manages its national formulary and how drugs other than those on the national formulary are made available to veterans.

GAO noted that: (1) VA's national formulary is administered by the Pharmacy Benefits Management Strategic Healthcare Group (PBM), a strategy modeled after one commonly used in private health care systems; (2) PBM adds drugs to, and deletes drugs from, the national formulary on the basis of a review of current literature related to drugs' safety and efficacy and the contributions they can make in treating veterans; (3) PBM also performs drug class reviews that determine which drugs are therapeutically interchangeable--essentially equivalent in terms of efficacy, safety, and outcomes; (4) this determination allows VA to obtain better prices for one or more of these drugs by using competitively bid contracts; (5) PBM safeguards against inappropriate use by requiring that clinical guidelines be followed when some drugs are used, limiting prescribing privileges in certain cases to specially trained physicians; (6) in other cases, PBM requires consultation with a specialist before a drug can be prescribed; (7) drugs not on the national formulary may be available to veterans through independent formularies maintained by Veterans Integrated Service Networks (VISN) and some medical centers; (8) these formularies are designed to provide local facilities flexibility by giving physicians access to additional drugs that meet the special needs of their patients; (9) if prescribers believe that a patient needs a drug that is not on the national, VISN, medical center formulary, they may request a nonformulary drug waiver, which would allow the prescriber to provide the nonformulary drug; (10) new drugs may be added to VISN and medical center formularies immediately upon Food and Drug Administration approval; (11) however, VA policy states that new drugs generally may not be added to the national formulary until they have been on the U.S. market for at least 1 year because VA believes veterans may be exposed to potential side effects that are not identified during the drug review and approval process; and (12) this potentially allows veterans treated in some facilities to benefit from new drugs before veterans in other locations, but it may also expose them to any side effects that are identified within the first year of a drug's general use.