NCPA - National Center for Policy Analysis


August 3, 2005

The Department of Defense (DOD) could save millions of dollars by using the Department of Veterans Affairs' (VA) prescription drug mail-order service, according to the Government Accountability Office (GAO).

In a pilot project, DOD refilled some prescriptions at three military treatment facilities through the VA mail-order service rather than the pharmacies at the facilities. According to researhcers:

  • Prices obtained through the VA mail-order service in most cases were lower for 90 medications and the DOD could save about $1.39 per prescription.
  • If this were currently in place, the DOD would have saved $1.5 million in 2003.
  • However, while DOD saved money on drug costs at the military treatment facilities, they paid administrative costs for refill operations twice -- first to the VA and then to maintain outpatient pharmacy refill operations.

However, the use of the VA mail-order service led to less traffic and shorter pharmacy waiting times for beneficiaries who continued to get some prescriptions at the DOD facility.

There are other potential cost implications for DOD if it decides to use the VA mail-order service, says GAO:

  • Since DOD beneficiaries are allowed to choose among various options for obtaining drugs, they would be able to obtain their drugs from retail pharmacies or DOD's mail order pharmacy.
  • However, these options are more costly; thus, if DOD closes the outpatient refill pharmacies at the sites where it is using VA mail-order services, costs could increase.

Source: "Mail Order Pharmacies: DOD's Use of VA's Mail Pharmacy Could Produce Savings and Other Benefits," Government Accountability Office, July 22, 2005.

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