VA May Have Improperly Spent Billions On Drugs and Other Items

The U.S. Department of Veterans Affairs may have improperly spent billions of dollars on purchases including pharmaceuticals, according to a lawmaker who is probing the allegations and whether the safety of those who use the medicine was put at risk.

At present, about 8.4 million Veterans receive VA medical care and benefits. But another 14.3 million Veterans and 35 million spouses and adult children, who do not receive such care and benefits, still see themselves as Veterans or parts of Veterans’ families, whether or not they ever visit the medical centers or apply for disability.

The VA has developed 16 major initiatives for 2011-2015 which include designing a Veteran‐centric health care model to help Veterans navigate the health care delivery system and receive coordinated care while improving the quality while reducing cost.

The VA may have paid out as much as $333 million without contracts in the fiscal year that ended Sept. 30, according to a letter to Veterans Affairs Secretary Eric Shinseki by U.S. Rep. Joe Donnelly, the top Democrat on the House Veterans’ Affairs subcommittee on oversight and investigations.

The unauthorized buying may have been going on for years and involved “billions of dollars” in spending, the Indiana congressman wrote. Donnelly’s letter asked Shinseki to explain how the agency can ensure that drugs purchased without contracts meet federal safety and efficacy standards, and that the VA paid a fair price.

The letter asked for records of meetings between VA officials and pharmaceutical suppliers as well as the names of agency leaders who approved decisions to buy drugs without contracts.

McKesson has been the VA’s sole drug supplier for veterans’ hospitals and the department’s mail-order pharmacies since 2004.

McKesson, Cardinal Health and AmerisourceBergen are vying to win a drug distributor contract worth up to $32B from the Department of Veterans Affairs. VA plans to award the new contract by January 2012.

Analysts view McKesson as the frontrunner for the contract, which is estimated at about 2 percent to 4 percent of McKesson’s current earnings. The impact of the current controversy will be determined very soon.

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