The Drug Companies’ $61.2 Million Overcharge

Drug manufacturers are legally required to sell to the VA at statutory discounts. OIG pricing reviews across FY2022–2023 found $61.2M in overcharges — most of it quietly collected back, one manufacturer bankrupt and never paying.

Under the Veterans Health Care Act of 1992, manufacturers of covered drugs must sell to the government at a discount computed from their non-federal average prices, and Federal Supply Schedule contracts add a price-reduction clause on top. Because the OIG’s individual pricing reviews contain sensitive commercial data, they are not published — this 2024 summary exists to make the totals public.

Across 15 reviews completed in fiscal years 2022 and 2023, the OIG identified approximately $61.2 million in overcharges: about $27 million from noncompliance with the pricing law and about $34.1 million from price-reduction-clause violations.

The follow-through is the unusual part of this record: VA collected approximately $59.3 million — about 97 percent — from 11 of 14 manufacturers. One manufacturer filed for bankruptcy and is not expected to pay anything; two others remained unresolved. Proof, in the VA’s own file, that the recovery machinery works when somebody runs it.

"the OIG identified approximately $61.2 million in overcharges by manufacturers to the government"
— VA OIG

Source: VA OIG — A Summary of Reviews in Fiscal Years 2022 and 2023 of Manufacturers’ Noncompliance with Veterans Health Care Act Provisions on Pharmaceutical Pricing. Part of the VA Fraud library — see also the case files for the prosecutions these systems produced.