When Veterans Become Test Cases For Drug Pricing Honesty
The Department of Veterans Affairs runs the largest integrated health care system in the country. It buys enormous volumes of drugs through the VA Federal Supply Schedule, a program that was supposed to solve a simple problem: if manufacturers tell the government what they charge their best commercial customers, the government will not get fleeced.
The contract paperwork calls this a Commercial Sales Practices disclosure. The theory is that the VA should get a price at least as good as the most favored commercial customer identified in that disclosure, consistent with the pricing rules in 38 U.S.C. § 8126.
In practice, the VA Office of Inspector General keeps finding problems. In its latest summary of pre-award reviews of pharmaceutical proposals for fiscal year 2025, the OIG reports that 11 of 16 manufacturers submitted proposals with deficiencies in those required disclosures, covering contracts with an estimated value of about $21 billion and 1,043 offered items.1 That is just under 69 percent. You do not need a graduate seminar in procurement policy to understand what that ratio means. You just have to be able to count.
How The VA Drug Pricing Gate Is Supposed To Work
The VA National Acquisition Center in Hines, Illinois, runs the pharmaceutical side of the Federal Supply Schedule program under a delegation from the General Services Administration.2 Drug companies that want in on that steady government demand submit proposals that include a Commercial Sales Practices disclosure.
On paper, it is straightforward. The manufacturer identifies its most favored commercial customer, lists the prices and discounts that customer receives, and explains any deviations from standard commercial pricing that might matter when the VA negotiates its own rates.
The OIG does not rubber stamp those claims. For selected high value proposals, it conducts what the agency calls a pre-award review. Investigators compare the disclosure against underlying sales data, rebates, and price concessions to see whether the manufacturer described its commercial pricing accurately and completely before the contract is awarded.1
The point is simple: the VA should not pay more than commercial customers pay for the same drug, especially when Congress has already told manufacturers in statute that prices for the VA and certain other agencies are capped at no more than a fixed percentage of the nonfederal average manufacturer price.
For fiscal year 2025, the OIG summary covers 16 pharmaceutical proposals with a combined estimated value of about $21 billion, offering 1,043 line items into the Federal Supply Schedule.1 These are not discount contracts for aspirin at the corner store. These are large volume, multi year deals that set the baseline for what the government pays and what manufacturers earn on veterans health care.
What Fiscal Year 2025 Actually Found
The headline number is astounding: 11 out of 16 proposals had disclosure deficiencies, as the OIG defines them. That category includes errors, omissions, or inaccuracies in the commercial sales practices data that manufacturers are required by contract to provide truthfully and completely.1
In seven of those 16 proposals, the OIG went further and made explicit pricing recommendations that helped contracting officers obtain about $24.7 million in savings before the contracts were awarded. That figure is not a theoretical projection, but one that reflects savings that VA contracting staff actually realized after the reviews.
The names of the manufacturers do not appear in the public record. Individual pre-award reports are sealed because they contain commercially sensitive pricing information that federal law protects from public release.1 So the taxpayers who funded the drugs, and the veterans who will take them, see only the aggregate scorecard. They get the failure rate and the total savings, but not which company left what out of its disclosure, or how hard the government had to push to fix it.
What that aggregate view does show is a pattern over time. The 2025 summary does not appear in isolation. In fiscal year 2023, the OIG reviewed 17 proposals and recommended approximately $120.6 million in savings for VA contracting officers.3
In fiscal year 2024, it reviewed 14 proposals and estimated about 54.9 million dollars in potential savings, of which the VA sustained $36.8 million after negotiations.4 The $24.7 million in 2025 is realized savings, not just a recommendation.
Whether that lower figure reflects cleaner initial proposals, a shift in which proposals the OIG chose to review, or less aggressive follow through by contracting officers is a question the public summary raises by implication and then leaves on the table.
Why Deficiencies Are The Point, Not A Glitch
The federal pricing rules for covered drugs exist because of a basic information gap. Drug manufacturers know exactly what they charge their best customers and what quiet concessions they make to close big commercial deals. The government generally does not, unless manufacturers are required to disclose it as a condition of doing business. Under the Veterans Health Care Act and its implementing contracts, that disclosure is not optional etiquette. It is a binding promise.
Getting it wrong can carry real penalties. If a manufacturer obscures or misstates its commercial pricing, the government can seek price adjustments, refunds, or more severe remedies. In some cases, that pattern of conduct turns into False Claims Act exposure. That is not a hypothetical risk. The Justice Department has used that statute against pharmaceutical companies that overcharged the VA by failing to live up to their pricing obligations.
Sanofi Pasteur, for example, agreed to pay $19.8 million to resolve allegations that it overcharged the department for certain vaccines by misreporting its pricing under the relevant federal program.5
The OIG pre-award review program exists to keep more of those problems from maturing into retroactive enforcement cases years later. Seen that way, 11 out of 16 proposals requiring correction is not proof that the process failed. It is proof that the process is catching something real every time it is used. It is also a reminder that without this gatekeeping, those same deficiencies could have gone straight into long term contracts with no one the wiser until a whistleblower or analyst stumbled over the gap.
What The Screen Misses By Design
The pre-award reviews have one unavoidable limitation, in that the OIG does not review every pharmaceutical proposal that comes through the Federal Supply Schedule door. For fiscal year 2025, it examined 16. The broader VA FSS pharmaceutical portfolio is bigger than that, and the OIG is candid that it selects high risk, high value targets rather than running a universal check.1
The individual pre-award reports remain confidential. The public does not see which manufacturers needed corrections or which contracting officers accepted, modified, or ignored OIG pricing recommendations. The $24.7 million in savings for 2025 is a documented floor, the confirmed amount that VA obtained after the reviews. How much was recommended but not sustained, as in 2024 when $54.9 million in potential savings yielded $36.8 million in actual reductions, is not broken out for 2025 in the public record.4
What the record does say is simple enough. The VA is the largest buyer of prescription drugs in the federal system. The OIG reviews only a fraction of the proposals, and roughly two thirds of those examined contain problems in mandatory pricing disclosures. The screen catches something. It does not catch everything.
Why Veterans Should Care Who Gets The Best Price
Veterans health care spending is not an abstraction on a chart. The VA pharmaceutical budget comes from public money and buys medicines for people who served in uniform. When a manufacturer submits an inaccurate Commercial Sales Practices disclosure on a contract worth hundreds of millions or billions of dollars, and the OIG flags it before award, that is oversight doing its job.
When about 69 percent of the proposals the OIG reviews contain deficiencies, year after year, that is the oversight system sending a message. The pre-award review program itself is relatively small compared with the volume of contracts it could examine. The path to catching more overcharging before it happens is not complicated. It involves more reviews, more often, with the same unglamorous insistence on accurate data.
The harder question is how to get accurate disclosures from the start. The summary reports, properly, stay out of that policy fight. They just present the numbers and leave the rest to the people who decide how much risk they are willing to run with other peoples medicine.
Bureaucracy Times 