$322.5 Million of Drugs Bought Off the Contract — 93% With No Paperwork

VA facilities bought $322.5M of pharmaceuticals outside the discounted prime vendor contract in one year. For ~93% of open-market purchases, auditors found no documented market research — and $197.4M was never reviewed at all.

The VA buys drugs through a prime vendor contract precisely so 1,300 facilities are not each negotiating alone. In the year ending March 2025, about 3 percent of its $11.7 billion pharmaceutical spend — some $322.5 million — bypassed that contract and went to the open market.

Auditing $276.7 million of those purchases, the OIG found staff often could not produce evidence they had tried the prime vendor first, and could not document market research to ensure cost-effectiveness for about 93 percent of the open-market purchases. Approving officials performed cursory reviews. The National Acquisition Center never reviewed $197.4 million of it, leaving those transactions with no program-office oversight at all.

The OIG’s conclusion is the systemic one: without visibility into these transactions, "VHA cannot identify inappropriate purchases, enforce compliance, or realize cost savings." VHA leaders generally agreed with the findings.

"VHA cannot identify inappropriate purchases, enforce compliance, or realize cost savings"
— VA OIG

Source: VA OIG — Audit of Pharmaceutical Purchases Made Outside the Prime Vendor Contract. Part of the VA Fraud library — see also the case files for the prosecutions these systems produced.