Review of Open Market Purchases under VA’s Pharmaceutical Prime Vendor Contract Number V797P-1020 Awarded to McKesson Corporation

The VA Office of Inspector General conducted a review of open market purchases and to a limited extent contract purchases under VA’s Pharmaceutical Prime Vendor contract with McKesson Corporation (McKesson). The review determined that open market purchases were overstated due to inconsistencies in McKesson’s ordering system much of which were due to delays by VA in updating prices. Ultimately price adjustments were made over time to reflect correct contract prices through McKesson’s credit and rebill process and internal pricing reviews conducted by VHA’s Pharmacy Benefits Management. In general, VA open market purchases are increasing due to the growing number of product shortages and allocation issues, problems that are not unique to the VA. In addition the lack of training and the use of known workarounds by VA staff using McKesson’s purchasing system led to open market purchases over contract purchases. OIG made 15 recommendations to Veterans Health Administration and the Office of Acquisition, Logistics, and Construction to improve pricing accuracies under the Pharmaceutical Prime Vendor contract and to minimize open market purchases.