Drug Cost Comparisons: Medicare and the Department of Veterans Affairs

OBJECTIVE

In general, Medicare reimburses pharmacies and health care providers for the drugs these entities have already purchased on the open market. In contrast, the Department of Veterans Affairs (VA) purchases drugs directly from a contracted wholesaler (i.e., the pharmaceutical prime vendor) at prices set through statutory rules and negotiations. Previous OIG and Congressional Budget Office studies have found these differences often result in widely different payment amounts for the same drugs—with Medicare payments regularly higher than the VA. Although Medicare and the VA operate under different statutory restraints with different processes to set prescription drug payment amounts, the fact that different Federal programs may pay vastly different amounts for the same drug has often raised concerns. This study will examine how Medicare drug costs compare to the VA’s costs for the same drugs.

TIMELINE

• May 15, 2025
  Announced
• Today
  Office of Evaluation and Inspections In-Progress
• Est FY2027
  Estimated Fiscal Year for Project Completion

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