Federal Manager's Daily Report

Federal agencies are missing out on potential “significant savings” from volume discounts on pharmaceuticals negotiated by the VA that could be, but are not, extended to other agencies that make similar purchases, an IG report has said.

The VA “has been delegated the authority and has the obligation” to negotiate Federal Supply Schedule temporary price reductions, or TPRs, on behalf of other federal agencies, said a report that began with a look at whether a 2017 contract yielded a more favorable reduction for the VA than for other agencies. The IG concluded that it did, and that the VA “also allowed the pharmaceutical vendor to exclude certain FSS customers from the TPRs altogether.”

More broadly, the IG found that the VA “has been routinely allowing and facilitating TPRs that benefit certain agencies and users for which it was negotiating, but not including others. In many instances, the TPR was exclusive to VA, resulting in additional savings for VA, but not other federal agencies.”

The IG added that while permanent price reductions can be restricted to certain agencies, for temporary reductions there is “no authority that would permit VA to award prices on the Federal Supply Schedule for its sole benefit, or one or more other agencies’ benefits, while additional users who are authorized by law or regulation lack access to those reduced prices.”

“By restricting TPRs and keeping them confidential from other federal agencies and the public, the goals and objectives of the FSS program are undermined, and taxpayers are likely to pay more for pharmaceuticals purchased by federal agencies that have not received the benefit of a voluntary vendor TPR or other commensurate price reduction,” the report said, estimating the added cost to other agencies versus the lowest prices made available to the VA at more than $600 million over two years.

However, VA management disagreed with the report’s main recommendation based on a dispute over the department’s legal authority, a disagreement that the report said remains unresolved.
ederal agencies are missing out on potential “significant savings” from volume discounts on pharmaceuticals negotiated by the VA that could be, but are not, extended to other agencies that make similar purchases, an IG report has said.

The VA “has been delegated the authority and has the obligation” to negotiate Federal Supply Schedule temporary price reductions, or TPRs, on behalf of other federal agencies, said a report that began with a look at whether a 2017 contract yielded a more favorable reduction for the VA than for other agencies. The IG concluded that it did, and that the VA “also allowed the pharmaceutical vendor to exclude certain FSS customers from the TPRs altogether.”

More broadly, the IG found that the VA “has been routinely allowing and facilitating TPRs that benefit certain agencies and users for which it was negotiating, but not including others. In many instances, the TPR was exclusive to VA, resulting in additional savings for VA, but not other federal agencies.”

The IG added that while permanent price reductions can be restricted to certain agencies, for temporary reductions there is “no authority that would permit VA to award prices on the Federal Supply Schedule for its sole benefit, or one or more other agencies’ benefits, while additional users who are authorized by law or regulation lack access to those reduced prices.”

“By restricting TPRs and keeping them confidential from other federal agencies and the public, the goals and objectives of the FSS program are undermined, and taxpayers are likely to pay more for pharmaceuticals purchased by federal agencies that have not received the benefit of a voluntary vendor TPR or other commensurate price reduction,” the report said, estimating the added cost to other agencies versus the lowest prices made available to the VA at more than $600 million over two years.

However, VA management disagreed with the report’s main recommendation based on a dispute over the department’s legal authority, a disagreement that the report said remains unresolved.