DLA Troop Support Medical pharmaceutical value engineering partnership with VA realizes $1 billion in cost avoidance for FY24

PHILADELPHIA -

PHILADELPHIA- The Defense Logistics Agency Troop Support Medical supply chain and the Department of Veterans Affairs work together through the national partnerships pharmaceutical prime vendor program to negotiate better value on prescription drugs.

Since the program's launch, cost engineering procurement grew to apply additional tactical strategies to negotiations on these medications to benefit DOD beneficiaries and partners.

"Since the program began in 2013, the total cost avoidance passed on to the consumer is approximately $8.1 billion," said Jason Wray, Medical Integrated Supply Team chief. "During the 2024 fiscal year, we strategically negotiated approximately $1 billion off commercial pricing on the medicines acquired."

The government-wide Pharmaceutical Prime Vendor program procures drugs through Federal Supply Schedule contracts that allow government collaboration with privately owned companies.

This agreement helps with lower pricing, specifically on high-dollar and/or high-volume medications.

"We realized the DOD and VA had similar usage on many medicines," Wray said. "Therefore, we were able to partner together by pooling our combined buying powers for significantly lower prices."

Medical Integrated Supply Chain Division Chief, Alexander Quinones, initially worked to standup the Pharmaceutical Prime Vendor program more than a decade ago.

"When the program started, we were charged with inserting a DOD team into an already established process," Quinones said. "It took a lot of hard work and collaboration to create a process that worked for all partners, but we were able to make it happen with our internal focus being on DOD equities."

The Federal Pharmacy Executive Steering Committee oversees this inter-agency alignment through regular communication via calls. Eventually, collaboration expanded to include more federal agencies with health systems also benefitting from the program's pricing on medications.

"Essentially, [FPESC] increases standardization and cost effectiveness of various drug therapies," Wray said. "These needs are tailored to partner agencies' individual medical system needs. As a result, quarterly calls about national contracts and cost avoidance addressing the tailored medicinal needs of the Defense Health Agency, Bureau of Prisons and Indian Health Services."

This arrangement has realized significantly lower pricing for FPESC members, specifically on the drugs most in demand.

One example is with a popular medication used to treat acid reflux and stomach ulcers, the FPESC realized a 99.97% reduction on the retail amount, Wray explained.

"That's huge as each agency involved with the FPESC has different needs, so we realized the best way to satisfy members' tailored needs," he said. "Further customer relations with reduced pricing expands partners' access to pharmaceuticals that may have been previously difficult to acquire."

Witnessing all the program's continued success is something Quinones said personally brings him pride.

"The realized cost savings proves that we created a sustainable model that will hopefully be carried on for years to come," he said.

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