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DEPARTMENT OF VETERANS AFFAIRS PROVIDING

CERTAIN VETERANS WITH A PRESCRIPTIONONLY HEALTH CARE BENEFIT

HEARING

BEFORE THE

SUBCOMMITTEE ON HEALTH

OF THE

COMMITTEE ON VETERANS’ AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

MARCH 30, 2004

Printed for the use of the Committee on Veterans’ Affairs

Serial No. 108–34

(
COMMITTEE ON VETERANS’ AFFAIRS 

CHRISTOPHER H. SMITH, New Jersey, Chairman 

MICHAEL BILIRAKIS, Florida 

TERRY EVERETT, Alabama 

STEVE BUYER, Indiana 

JACK QUINN, New York 

CLIFF STEARNS, Florida 

JERRY MORAN, Kansas 

RICHARD H. BAKER, Louisiana 

ROB SIMMONS, Connecticut 

HENRY E. BROWN, JR., South Carolina 

JEFF MILLER, Florida 

JOHN BOOZMAN, Arkansas 

JEB BRADLEY, New Hampshire 

BOB BEAUPREZ, Colorado 

GINNY BROWN-WAITE, Florida 

RICK RENZI, Arizona 

TIM MURPHY, Pennsylvania 

LANE EVANS, Illinois 

BOB FILNER, California 

LUIS V. GUTIERREZ, Illinois 

CORRINE BROWN, Florida 

VIC SNYDER, Arkansas 

CIRO D. RODRIGUEZ, Texas 

MICHAEL H. MICHAUD, Maine 

DARLENE HOOLEY, Oregon 

SILVESTRE REYES, Texas 

TED STRICKLAND, Ohio 

SHELLEY BERKLEY, Nevada 

TOM UDALL, New Mexico 

SUSAN A. DAVIS, California 

TIM RYAN, Ohio

PATRICK E. RYAN, Chief Counsel and Staff Director 

SUBCOMMITTEE ON HEALTH 

ROB SIMMONS, Connecticut, Chairman 

JERRY MORAN, Kansas 

RICHARD H. BAKER, Louisiana 

JEFF MILLER, Florida 

JOHN BOOZMAN, Arkansas 

JEB BRADLEY, New Hampshire 

BOB BEAUPREZ, Colorado 

GINNY BROWN-WAITE, Florida 

RICK RENZI, Arizona 

CLIFF STEARNS, Florida 

TIM MURPHY, Pennsylvania 

CIRO D. RODRIGUEZ, Texas 

BOB FILNER, California 

VIC SNYDER, Arkansas 

TED STRICKLAND, Ohio 

SHELLEY BERKLEY, Nevada 

TIM RYAN, Ohio 

LUIS V. GUTIERREZ, Illinois 

CORRINE BROWN, Florida 

DARLENE HOOLEY, Oregon

(II) 
(III)

C O N T E N T S 

March 30, 2004

Page

Department of Veterans Affairs Providing Certain Veterans With a Prescription-Only Health Care Benefit ............................................................................ 1

OPENING STATEMENTS 

Chairman Simmons ................................................................................................. 1

Prepared statement of Chairman Simmons ................................................... 43

Hon. Ciro D. Rodriguez ........................................................................................... 2

Prepared statement of Congressman Rodriguez ............................................ 46

Hon. Bob Beauprez .................................................................................................. 10

Hon. Shelley Berkley ............................................................................................... 10

Prepared statement of Congresswoman Berkley ........................................... 48

Hon. Darlene Hooley ............................................................................................... 12

Hon. Ted Strickland ................................................................................................ 13

WITNESSES 

Banas, Sr., Edward S., Commander-in-Chief, Veterans of Foreign Wars ........... 4

Prepared statement of Mr. Banas ................................................................... 49

Blake, Carl, Associate Legislative Director, Paralyzed Veterans of America ..... 31

Prepared statement of Mr. Blake .................................................................... 82

Gaytan, Peter S., Principal Deputy Director, Veterans’ Affairs and Rehabilitation Division, The American Legion ................................................................... 28

Prepared statement of Mr. Gaytan ................................................................. 72

Hong, M.D., Cornelio R., Norwich Internal Medicine, Norwich, CT ................... 5

Prepared statement of Dr. Hong ..................................................................... 53

Ilem, Joy J., Assistant National Legislative Director, Disabled American Veterans ...................................................................................................................... 33

Prepared statement of Ms. Ilem ...................................................................... 89

Jones, Richard, National Legislative Director, AMVETS .................................... 34

Prepared statement of Mr. Jones .................................................................... 93

Perlin, Jonathan B., M.D., Deputy Under Secretary for Health, Department 

of Veterans Affairs; accompanied by Michael A. Valentino, Chief Consultant, Pharmacy Benefits Management, Department of Veterans Affairs; and 

Barbara J. Manning, Program Analyst, Policy and Forecasting Service, 

Department of Veterans Affairs .......................................................................... 15

Prepared statement of Dr. Perlin, with attached survey questionnaire, ..... 58

Weidman, Rick, Director, Government Relations, Vietnam Veterans of America .......................................................................................................................... 29

Prepared statement of Mr. Weidman, with attachment, .............................. 74

MATERIAL SUBMITTED FOR THE RECORD 

Written committee questions and their responses: 

Chairman Simmons to Paralyzed Veterans of America ................................ 99

Chairman Simmons to Disabled American Veterans .................................... 101

(1)

DEPARTMENT OF VETERANS AFFAIRS PROVIDING CERTAIN VETERANS WITH A PRESCRIPTION-ONLY HEALTH CARE BENEFIT 

TUESDAY, MARCH 30, 2004

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON HEALTH, 

COMMITTEE ON VETERANS’ AFFAIRS, 

Washington, DC 

The subcommittee met, pursuant to notice, at 10 a.m. in room 

334, Cannon House Office Building, Hon. Rob Simmons (chairman 

of the subcommittee) presiding. 

Present: Representatives Simmons, Rodriguez, Snyder, Strickland, Boozman, Berkley, Bradley, Beauprez, Brown-Waite, and 

Hooley. 

OPENING STATEMENT OF CHAIRMAN SIMMONS 

Mr. SIMMONS. Ladies and gentlemen, good morning. This is a 

hearing of the Subcommittee on Health of the Committee on Veterans’ Affairs. 

This morning the hearing will be on a prescription-only health 

care benefit for veterans. This is an information hearing, this is not 

a legislative hearing. We do not have a legislative proposal before 

us, although many legislative proposals have been offered to the 

subcommittee and to the committee in the past. 

But as I recall, the history of those proposals, for one reason or 

another, they never quite filled the bill. And as a consequence, they 

did not go forward. 

I have a prepared statement, which I will request be placed in 

the record as read. But to summarize the issue briefly, there are 

veterans today who are Medicare-eligible. There are veterans today 

who have access to health care through a provider other than the 

Veterans Administration who have been seeking access to the VA 

system for pharmacy benefits. 

And in those cases, it has been the policy of the Veterans’ Administration to schedule them for an examination, which sometimes takes several months, sometimes takes the better part of the 

year. 

And yet, all these veterans really want is to access the VA for 

a pharmacy benefit so that their physician or their health care provider will manage their health care situation. But as veterans, they 

will take advantage of the VA pharmacy to acquire those prescription drugs. It is my understanding that on an annualized basis, the 
2

cost of those additional examinations can exceed $1 billion—$1 billion. 

And it seems to me that at a time when we are balancing the 

competition for scarce resources, that this duplication of effort 

makes little sense, and that if this committee and the veterans’ service organizations and the Veterans’ Administration could somehow get our heads together to frame a program that would be a 

cost-plus program so that these veterans—many of them sevens 

and eights—could access the system at cost, perhaps with an administration fee, that it would serve them very well, that it would 

not take away from those scarce resources that the Veterans Administration needs for its primary, secondary, and tertiary care 

programs, and it would accommodate those veterans who are currently waiting in line to try to get that pharmacy benefit. 

So, this issue has preyed on my mind for several years. It seems 

that somewhere in all of this there must be a logical solution, and 

that is why I decided to proceed today, even absent a specific legislative proposal, to have this subject matter hearing on this subject. 

And now, I would like to ask if my friend and colleague, Mr. 

Rodriguez, has an opening comment that he would like to make. 

[The prepared statement of Chairman Simmons appears on p. 

43.] 

OPENING STATEMENT OF HON. CIRO D. RODRIGUEZ 

Mr. RODRIGUEZ. Thank you, Mr. Chairman. I want to thank you 

for holding this timely hearing. And let me also just indicate that 

at the same time that the VA provides some prescription discounts 

for our veterans, it doesn’t make any sense, as you have indicated, 

to have veterans out there that could have access to prescription 

benefit that have to go through a lengthy and unnecessary process. 

And I agree with you that we might be able to come up with some 

kind of compromise there, and be able to make something happen. 

But it also doesn’t make any sense that the VA has been able 

to also make some arrangements with the pharmaceutical companies to lower drug costs, but Medicare is not allowed to do that. It 

just doesn’t make any sense. 

Last year I know we had an opportunity to discuss various proposals to improve the availability and eligibility of pharmaceutical 

services provided by the Department of Veterans Affairs. I am a cosponsor of one of the measures that we discussed, which was filed 

by ranking member Lane Evans, which is H.R. 1309. 

This bill would allow veterans, as Medicare beneficiaries, to purchase drugs prescribed by non-VA physicians from the VA. In testimony regarding Mr. Evans’ bill, the VA stated that Mr. Evans’ efforts to provide a less expensive alternative for Medicare-eligible 

veterans to obtain pharmaceutical drugs were unnecessary because 

the Medicare reforms were being developed at that time. Since we 

were looking at some kind of Medicare reform during that time, we 

postponed H.R. 1309. 

Since Congress approved the Medicare legislation, however, the 

VA has completed an analysis of its impact on the VA and veterans, and determined that there is a very minimal impact. I am 

interested to hear, if in light of this finding, that the VA has reconsidered its position on H.R. 1309. 
3

And also, Mr. Chairman, those who support H.R. 1309 decided 

to postpone decisions on the measure while we worked out the details of the prescription drug benefit that would be widely available 

to our seniors under Medicare. Unfortunately, as we—it must be 

pretty clear to everyone now even at this early date—that the bill 

Congress ultimately passed does not address the needs of all our 

seniors. And if it had, then we would not be having the discussions 

about the VA’s role in helping our senior veterans. 

In fact, the VA has been addressing this lack of prescription drug 

benefits with a transitional drug benefit offered to certain veterans 

whom it determined were likely to wait more than 6 months for an 

appointment. And so we still have situations where veterans have 

to wait 6 months, and somehow we need to figure out how we can 

fix this problem. 

Of course, we also know that the problems with waiting times 

really must be addressed by Congress in appropriating more funds 

to the VA. And we all know that the staffing problems that exist 

are also serious. 

In assessing any of the legislative proposals on the table, it is important to understand the demand for and cost of a the new benefit. The VA must have a way, outside of our normal appropriation 

process, to pay for a benefit that could conceivably double its pharmacy workload. 

I know in Mr. Evans’ bill, H.R. 1309, those funds come from 

Medicare. I think that could be an alternative that we ought to 

look at further and see how Medicare could play a role in funding 

prescription drugs for our veterans. 

I look forward to the testimony we’re going to be hearing from 

our three panels. Thank you. 

[The prepared statement of Congressman Rodriguez appears on 

p. 46.] 

Mr. SIMMONS. I thank the gentleman. And if we can proceed, we 

will hold further comments until our first panel, if that is agreeable. 

Today, we will hear testimony in panel one from my friend and 

colleague, Ed Banas, who is commander of the Veterans of Foreign 

Wars, and a constituent living in eastern Connecticut. And I see Ed 

there. 

He is accompanied by Dr. Cornelio Hong, a practicing physician 

from Norwich, CT, who has also served in uniform—I believe in the 

war in the Gulf in the early 1990s—and he will provide a practitioner’s perspective on why VA should be providing a prescription 

drug service to our nation’s veterans. 

Following the first panel, we will be hearing from the Department of Veterans Affairs on its efforts to provide transition pharmacy benefits to ease the pressure on veterans while waiting for 

VA health care. 

At this point, I will ask Dr. Hong and National Commander 

Banas if they would come to the witness table, and I thank them 

for their participation here today. The two of them have not only 

served their country with distinction in uniform, but they continue 

that service as members of the Veterans of Foreign Wars of the 

United States of America. 

Welcome to you both, and Commander Banas, please proceed. 
4

STATEMENTS OF EDWARD S. BANAS, SR., COMMANDER-INCHIEF, VETERANS OF FOREIGN WARS; AND CORNELIO R. 

HONG, M.D., NORWICH INTERNAL MEDICINE, NORWICH, CT 

STATEMENT OF EDWARD S. BANAS 

Mr. BANAS. Thank you very much. Mr. Chairman, members of 

this subcommittee, as the commander-in-chief of the 2.6 million 

men and women of the Veterans of Foreign Wars of the United 

States and our ladies’ auxiliary, I would like to thank you for this 

opportunity to testify today. 

It has indeed been an honor working with the members of this 

subcommittee, especially with the chairman, whom I am proud to 

call my Congressman and my friend. And I thank everyone on this 

committee and their hardworking staffs for the dedication to the 

important issues at hand. 

The central issue of today’s hearing, and the draft bill under consideration, the VFW Pharmacy Fairness Act is what can be done 

to improve veterans’ access to pharmaceuticals. The Department of 

Veterans Affairs offers an outpatient prescription drug benefit to 

enrolled veterans as part of its uniform health care package. 

Comparable to prescription drug plans offered by numerous 

health care insurers, this earned benefit is very important to many 

veterans, especially those without any prescription drug coverage. 

Currently, VA provides a 30-day supply of pharmaceuticals for a $7 co-payment to enrolled veterans. The co-payment is waived for 

prescriptions related to treatment of service-connected disabilities. 

Additionally, veterans with a 50 percent or higher disability rating, 

or those who are indigent are not required to make co-payments. 

Unfortunately, present department procedure drastically limits 

veterans’ access to VA pharmaceuticals. Current law prohibits VA 

from filling prescriptions from duly licensed physicians who do not 

practice within the VA health care system. 

Due to the lengthy delays in scheduling appointments, many veterans have turned to their private physicians outside the VA 

health care system. At its peak, there were nearly 300,000 veterans 

waiting 6 months or more for a medical appointment. We believe 

that many of these veterans became discouraged with the wait, and 

were effectively forced to seek care outside VA. 

Even now, despite improvements, there are still thousands of 

veterans waiting 6 months or more for appointments. Many of 

them have established solid relationships in histories with their 

outside physician. 

A veteran who obtains care from his or her private physician, 

whether for convenience, out of familiarity, or some other reason, 

is unable to have that prescription filled through VA, that veteran, 

despite already having a diagnosis, is forced to wait for an appointment with a VA physician who basically will provide the same battery of tests, the same exams, and eventually the same diagnosis 

as the veteran’s private physician. Only then, after waiting months 

for a duplicative exam, can the veteran have VA fill that prescription. 

I do not see the rationale for this. The duplication of service is 

a waste of time for the veteran, and absolutely a mismanagement 

of resources for the VA. In fact, in December 2000, the VA inspec-
5

tor general had projected that this redundancy of services would 

waste in excess of $1 billion a year. And we expect that this number would be fairly higher today. 

When VA is currently unable to meet the demand for services, 

and it forces veterans to wait months for an appointment, it simply 

is irrational for VA to slide these veterans to the back of a growing 

line. They already have their diagnosis, they simply need to utilize 

the benefit that the VA provides. 

And additionally, it does not make sense to sever the important 

relationships that many veterans have established with these outside doctors, the openness and trust that can come with familiarity 

can lead to optimal treatment and much better health care. VA 

should not impair these connections. 

The VFW strongly supports a pharmaceutical benefit that allows 

all veterans optimum access to pharmaceuticals they need for their 

health and for their well-being. And given the current situation 

and the opportunity to potentially mitigate the impact of long waiting lines, and produce cost savings by streamlining and inefficient 

and an overly bureaucratic process, VFW supports the creation of 

an outpatient prescription benefit that would free up VA health 

care appointments and potentially reduce the backlog. 

In addition, we support providing an outpatient medication benefit to Medicare-eligible category eight veterans who are currently 

precluded from enrolling in VA health care. The VFW, however, 

does not support requiring veterans to forego their earned VA 

health care in favor of Medicare. 

Veterans are unique in that they have an entitlement to Medicare by way of financial contribution, and have also earned the 

right to VA health care through virtue of service to their nation. 

They must not be forced to give up these rights to either. The VFW 

will continue to fight for adequate appropriations to allow all veterans access to VA medical benefit packages. 

And I see, as my light dwindles down, I am trying to make a 

point, Mr. Chairman, that just makes a very logical statement, and 

all one has to do is go to a VA hospital and participate in that program of primary care, and sense the frustration in the extra burden of monetary issues that are forced on the VA because of that 

when this simple procedure, allowing people who are licensed by 

the federal government all across America to write that prescription and alleviate a lot of pain and a lot of time for veterans who 

are requiring the care, and the people who are administering the 

services in the VA hospitals. Thank you. 

[The prepared statement of Mr. Banas appears on p. 49.] 

Mr. SIMMONS. Thank you, Ed, very much for your testimony. 

And now, I will ask Dr. Hong to speak. 

STATEMENT OF CORNELIO R. HONG 

Dr. HONG. Thank you, Mr. Chairman and members of the subcommittee. I am an internist, and I have been in private practice 

for the last 28 years, except for that period in my life when I went 

to Desert Storm. 

But in my 28 years of private practice, I have seen a few veterans that come to me, and more recently I have seen them going 

to the VA facility, just to have the prescriptions filled. A particular 
6

case that I am going to bring to your attention today will probably 

illustrate my entire testimony. And this is an actual case, and actually a few other cases that I have seen in my practice. 

Mr. M is 77 years old. He is a World War II veteran. He got out 

of the service in 1949. He has no service-connected disability, but 

he has diabetes, he has high blood pressure and high cholesterol 

level. It is a quite common diagnosis for a lot of us. 

Now, 4 years ago, as his prescription costs escalated, and upon 

the advice of his barber, he enrolled in the VA. He continues to see 

me, as his primary care physician. But in order for him to get his 

prescription filled at the VA he has to also be seen by a VA physician. 

Well, this worked quite well, for the fact that his prescriptions 

are what we would call as chronic medication prescriptions. And 

most of the time he would get a 3-month supply, and he would pay 

a co-pay, a $7 co-pay, for each 30-day supply. Unfortunately, if I 

were to change his prescription, he has to go back to his VA physician to get this prescription rewritten again. 

Now, there were a few instances where we have discovered that 

there have been duplications of services, for instance ordering the 

same laboratory test, or sending him to the same consultant, such 

as, for instance, a cardiologist or a diabetes specialist. But all in 

all, we try to avoid such duplication. 

Now, Mr. M has six different medications, and he pays a total of $42 per month as his co-payment at the VA. And this worked 

quite well with him, except that Mr. M, if we were to enroll today, 

he would be in priority level eight, and he would not have received 

any benefits whatsoever. 

Now, this is in contrast to Mr. F, who also has the same diagnosis, who also is a veteran. Unfortunately, Mr. F did not enroll 

early at the VA facility. He, at this time, cannot enroll at all. And 

therefore, Mr. F is not receiving any VA benefits for the same illnesses and for the same service that he rendered in this country. Now, Mr. F pays a total of $642 a month for his prescription, 

which he gets retail. Now, if Mr. F were to get the benefit of a cost 

medication from the VA, he would pay a total of $150 for the same 

prescription that he is now getting. This will make a huge difference in Mr. F’s financial status in his family. 

I am bringing these two cases together because this contrast, 

what Mr. F is up to at this time, and both cases illustrate completely what is going on with the veteran in this country and the 

relationship with the VA. Those listed in priority level eight after 

January 16, 2003 have no benefit whatsoever today. 

Those that are already in the system, if you were to continue getting this benefit, he also has to first be seen by his private physician, and he needs to continue seeing his private physician for 

whatever changes in prescriptions he will be given by his private 

physician, which again, brings us this cascade of problems, namely 

it creates gridlock in the VA system. Two, there is duplication of 

services. And three, it adds cost to the already burdened VA system. 

But most importantly, there is a delay in service. There is a 

delay in care. This veteran cannot get that prescription. If he were 

to come to me because he has pneumonia, and I have to write him 
7

that antibiotic, this veteran already in the system cannot get that 

prescription filled in a VA pharmacy because of—that he has to be 

first seen by his physician. 

Now, this bill would be a right step in the right direction, because it provides benefits to the veterans who are otherwise not receiving benefits in the VA facility, and it helps ease up some of the 

backlog. And most importantly, it also helps a group of veterans 

who are not otherwise receiving any care at this time. Thank you. 

[The prepared statement of Dr. Hong appears on p. 53.] 

Mr. SIMMONS. I thank the gentlemen for their testimony. Let me 

see if I can understand this situation involving Mr. F and Mr. M. 

Dr. Hong, these are real people that are under your care, is that 

correct? 

Dr. HONG. That is correct. 

Mr. SIMMONS. These are no hypotheticals. 

Dr. HONG. That is correct, they are not hypothetical. 

Mr. SIMMONS. They are not hypothetical people. These are real 

people under your care. Currently, Mr. F, who is a priority eight 

veteran, would be paying $650 for his medications on the outside. 

Is that correct? 

Dr. HONG. $642 on the outside. 

Mr. SIMMONS. $642 on the outside. By that, I mean through the 

routine civilian health care provides. 

Dr. HONG. Through the retail—— Mr. SIMMONS. The retail outlets. However, if he was able to access the VA for a pharmacy benefit, not for the, you know, all the 

bells and whistles but just for the pharmacy benefit, his costs, you 

estimate, would be reduced to around $150? 

Dr. HONG. That is correct, sir. 

Mr. SIMMONS. Yes. And yet Mr. M, who had either the foresight 

or the luck to get into the system when he could, pays a pharmacy 

benefit plus the full service benefit co-pay of around $42. 

Dr. HONG. Forty-two dollars. 

Mr. SIMMONS. For essentially the same prescription drugs. 

Dr. HONG. Yes, sir. 

Mr. SIMMONS. Now, the term I use is ‘‘fairness.’’ Why is this fair, 

first and foremost? And secondly, why is this efficient? Is this a fair 

system, and is it an efficient system? 

Dr. HONG. Well, one would say that it is not a fair system, because Mr. F is paying quite a lot today for him to get his prescriptions, whereas Mr. M, who is already in the system, is paying a copay only. And therefore, he is benefitting from the prescription benefit that he is getting. 

Now, all veterans, I think, has—should get that benefit package, 

one way or the other. But unfortunately, Mr. F is screened out. 

And so, the system is not fair to him. 

Mr. SIMMONS. So, the eligibility for access to benefits appears to 

be the same. They are both priority eight veterans. 

Dr. HONG. They should be. 

Mr. SIMMONS. But because of bad timing or bad luck, just, you 

know, Mr. F just didn’t make the right decision at the right time, 

he is essentially shut out. And yet Mr. M, who had the foresight 

to get into the system at a certain point, before the system shut 

down, he is doing extremely well. 
8

And yet, their eligibility for access to benefits, both are veterans, 

both are priority eight veterans. 

Dr. HONG. Yes. 

Mr. SIMMONS. But one is treated very differently from the other. 

Let me ask another question of Commander Banas. He referred to 

the inspector general’s report, and this is a report that is dated December 20th of the year 2000. 

And in this report, the issue of a pharmacy benefit only program 

is considered. And the Office of the Inspector General makes the 

statement, ‘‘We recognize that a decision to continue the current 

policies’’—the current policies—‘‘results in inefficiency and waste that we estimate annually costs the Department over $1 billion in 

resources that could be better used in the delivery of health care 

services to veterans.’’ It seems to me that we spend a lot of time in this committee, in 

this subcommittee and in the committee generally, and in the Congress, and a lot of time with the veterans service organizations, attempting to allocate resources to provide health care to our veterans, which I feel—and I think many of the members of this committee feel—that they have earned. 

And yet, the VA inspector general’s report says that the duplica- tion of effort and the waste in re-examining costs us almost $1 billion a year. That’s a lot of money to be used for another purpose. 

Mr. Banas, do you have a comment on that? 

Mr. BANAS. Yes, I do. Mr. Chairman, you know veterans come 

from Park Avenues and park benches. And all one has to do is go 

to a VA hospital and sit back and casually observe, talk to people, 

and you will sense this redundancy, and you can understand how 

much time is wasted by the staff who are part of the organization 

in these individual VA hospitals. 

And it just seems to me that all veterans are entitled to—this 

would basically be a self-sustaining thing, depending on how the 

Secretary would promote it. Even if it were through the cost of the 

individual drug at the cost to the VA, because drugs can cost from 

a penny for a prescription to whatever, you know, it’s self-sustaining. It just gives the person the option to do that. 

And when I say Park Avenue and park benches, those park 

benches need this very, very much. And when you have that delay 

in time, it can cause an adjustment or a loss of life, which Dr. Hong 

and I discussed of a veteran from Connecticut this morning. Because of a delay in an appointment, the man’s cancer went from 

his lungs to his lymph nodes. 

And you know, the VA is really never medically negligent, it’s 

just issues of timing. And for me to see my own private doctor, I 

can do that after work in 15 minutes with an appointment. But to 

go to a VA facility, I have to give up an entire day almost for that 

30-minute window. It just seems that this is the logical approach, 

sir. 

Mr. SIMMONS. You made the comment—and I see the orange 

light—that the veteran already has his diagnosis, he already has 

a relationship with a doctor. And I think we all know that once 

those relationships develop, you feel comfortable with them. 

So, why shouldn’t they simply utilize the pharmacy benefit? And 

Dr. Hong made the comment that sometimes the doctors, the two 
9

doctors, talk to each other. Is that a hard thing to do? Is that really 

complicated? I mean, I think that, from my perspective, if you have 

a primary care physician you would simply fill your prescription at 

VA pharmacy. 

But let’s say the VA wants to double-check or even talk with a 

primary care physician. Is that a hard thing to do? I mean, don’t 

doctors talk to each other? 

Mr. BANAS. I would imagine that it is, and I’m sure that Dr. 

Hong could answer that better than I, except that I know that he 

is a true veterans’ advocate, and takes that extra step to clarify 

something with a VA physician on behalf of his patient. 

Mr. SIMMONS. So he does communicate with the VA doctor. I 

thank you both, I see the red light, and I defer now to my colleague, Mr. Rodriguez. 

Mr. RODRIGUEZ. Thank you very much, Mr. Chairman. Let me, 

first of all, thank you for being here and talking about this key and 

important issue. And I agree with you, that it just doesn’t make 

any sense that, you know, if I want to see my private doctor and 

then still go—try to get my prescriptions, that I should be able to 

do that. 

And you also mentioned that you would also be supportive of the 

idea of looking at a reimbursement from Medicare. Have you all 

looked at the H.R. 1309 bill by Lane Evans that allows that opportunity, and are you in favor of that? 

Mr. BANAS. To be honest with you, sir, I don’t have enough 

knowledge about that bill to develop a discussion with you. 

Mr. RODRIGUEZ. Okay. My understanding is it allows an opportunity for veterans, under Medicare, to be able to get that prescription, and for it to be reimbursed through Medicare. And so we were 

trying to get that done as quickly as possible, and that is under 

H.R. 1309. 

Let me ask you also—and I am not familiar with this other bill, 

either, but Senator Specter’s S. 1153, yours sounds very similar to 

that. Is that—is your bill, or what you are looking at, comparable 

to S. 1153, the Senate bill, or——

Mr. BANAS. I don’t know that. 

Mr. RODRIGUEZ. Okay, thank you. Are you getting anyone to file 

a piece of legislation that basically incorporates what you’re talking 

about? 

Mr. BANAS. I hope so. 

Mr. RODRIGUEZ. Okay. 

Mr. SIMMONS. Would the gentleman yield for 30 seconds? 

Mr. RODRIGUEZ. Yes. 

Mr. SIMMONS. I provided Commander Banas with a concept, with 

an idea, which was the issue of a cost-plus pharmacy benefit. But 

because there is other legislation out there, and because we didn’t 

want to key on any particular draft, we made the decision to try 

to have this as a subject matter hearing, as opposed to legislative. 

Mr. RODRIGUEZ. Okay. 

Mr. SIMMONS. And that is why we don’t have a document in front 

of us, and probably why he isn’t prepared to respond. 

Mr. RODRIGUEZ. Yes, maybe you—it might not be appropriate, 

but maybe for the other two panels or for our staff, getting some 

kind of assessment in terms of possible cost to allowing that, be-
10

cause you mentioned that we might save $1 billion because of the 

fact that we wouldn’t have to duplicate. And I would like to, you 

know, maybe just get some estimates of cost. 

And I personally just philosophically agree that we ought to be 

providing prescription drug coverage for our veterans, and we’re 

not anywhere close to responding to the needs of our veterans, 

based on the number that we service now. 

And I also agree totally that in some cases, people want to see 

their personal physician and develop that relationship with their 

personal physician, but that they should be able to come to a VA 

hospital, VA clinic, or VA pharmacy to be able to get other types 

of services. So I agree with the concept. Thank you very much. 

Mr. BANAS. Thank you. 

Mr. SIMMONS. I thank the gentleman, and I agree with him completely, that these are questions we should put to the subsequent 

panels. Next, we have Mr. Beauprez. 

OPENING STATEMENT OF HON. BOB BEAUPREZ 

Mr. BEAUPREZ. Thank you, Mr. Chairman, and thank you for 

holding this hearing. Certainly since I have been on the committee, 

I think this subject has come up over and over and over again, and 

we continue to wrestle with the challenges, both as they affect cost 

and timing and access for our veterans, and the burden on the system, in total. 

I think the—I think both witnesses have framed the situation 

very well, and I thank and compliment them both. And with your 

questioning, I think we have gotten further enlightenment. 

I will forgo any additional questions. I am looking very much forward to our second panel, and Dr. Perlin, and seeing if we can 

maybe start to hone in on a solution. So, with that, I will yield 

back, Mr. Chairman. 

Mr. SIMMONS. I thank the gentleman. Ms. Berkley. 

OPENING STATEMENT OF HON. SHELLEY BERKLEY 

Ms. BERKLEY. Thank you very much, Mr. Chairman, for holding 

this very important hearing. I am going to ask that I have permission to submit my opening statement for the record, and just say 

a very few words. 

First, Commander and Doctor, I appreciate your comments very 

much, and I agree wholeheartedly with what you’re suggesting. 

You might be interested to know that even though the veterans in 

my district—and I’ve got the fastest- growing veterans population 

and the fastest-growing senior population in the United States—

even though we don’t have a veterans hospital yet or a veterans 

outpatient clinic or a veterans long-term care facility, what we do 

have is an increase in the past year, 21 percent increase, in the 

number of prescription drugs filled in the facilities that we do have 

for our veterans. 

In the first 4 months of this fiscal year, the VA pharmacy and 

clinics have filled over a half-a-million prescriptions for southern 

Nevada veterans. I know that they are—we are—in desperate need 

of providing prescription medication to all of our veterans, including our priority eights. 
11

I also find it—I agree with what you say, Commander, that veterans shouldn’t have to choose between Medicare and a prescription medication benefit under the VA system. They are entitled to 

both, and they should not have to choose. 

I don’t think there is much faith in the prescription medication 

benefit that we passed a mere 4 months ago. I think our veterans 

realize that they need to get their health care needs met and their 

prescriptions filled at the VA clinics and hospitals. 

And I’m married to a nephrologist who has many veterans as patients, and while you may be able to get in to see your doctor in 

15 minutes, I can tell you in Las Vegas, because we have a health 

care crisis, that it takes people—unless they have an emergency, 

it will take them 3 months to get in to see a regular doctor in Las 

Vegas. 

So they are really caught in the cross-hairs, because they have 

a very—an inordinately long waiting list at the VA, and almost an 

inordinately long wait, if they want to go see their doctor. To have 

to do that twice is unconscionable. 

So I thank you for being here, I support what you’re suggesting, 

and I look forward to working with you to make this dream a reality. 

[The prepared statement of Congresswoman Berkley appears on 

p. 48.] 

Mr. BANAS. Thank you. 

Mr. SIMMONS. I thank the lady. Ms. Brown-Waite? 

Ms. BROWN-WAITE. Thank you, Mr. Chairman. I certainly want 

to thank the panelists who are here for this segment. My questions 

are actually for the VA, Mr. Chairman, but I did want to say that 

it was very informative. 

Mr. SIMMONS. Thank you. Ms. Hooley? Excuse me, I apologize. 

Mr. Snyder. 

Dr. SNYDER. Thank you, Mr. Chairman. Commander Banas, I appreciate your—both of your—testimony today. There is—the whole 

issue of prescription drugs has occupied a lot of attention by anyone who cares about health policy for a long time, including the 

Congress. And the Congress passed the Medicare prescription drug 

bill with a lot of controversy here a few months ago. 

You don’t have much hopes for that of solving this problem, if I 

read your opening statement correct, is that—— Mr. BANAS. No, I basically am saying that every veteran is entitled to the services that are provided by the VA, and I basically 

came here to make a statement, sir, that says that any licensed 

physician who is federally licensed I the United States of America 

and can prescribe a drug for me should be able to communicate 

that to a VA facility pharmacy and allow me to have my drugs in 

a timely fashion and eliminate a lot of bureaucracy in between. 

Dr. SNYDER. No, I understand that. It’s just that if—I think my 

guess is—well, I will just read your statement. You say, ‘‘Although 

many veterans will be eligible for these Medicare Prescription Drug 

Improvement Act reforms, the complexity of the many types of coverage available under the plan, as well as the large gaps in coverage, make it an unattractive alternative for most veterans.’’ As I read your statement, you were saying that Medicare-eligible 

veterans, if it was an attractive alternative, and they could get 
12

their coverage elsewhere, they probably wouldn’t even be lining up 

at the VA for their prescriptions. Is that what you considered an 

unattractive—in your words—an unattractive alternative for most 

veterans? And I was just wanting you to amplify on that. 

Mr. BANAS. Well, I don’t find it to be unattractive, I just find it—

I perceive this as part of—a necessity on behalf of veterans who are 

not monetarily capable of getting their medicines in other ways, 

and that this is just a direct focus to a proper plan. 

Dr. SNYDER. No, I understand that. I want to be sure—all right, 

thank you. Thank you, Mr. Chairman. 

Mr. SIMMONS. Thank you. Ms. Hooley. 

OPENING STATEMENT OF HON. DARLENE HOOLEY 

Ms. HOOLEY. Thank you, Mr. Chair, thank you for having this 

hearing today. Mr. Hong, just a quick question. I appreciate your 

testimony. I support allowing when a veteran can’t get in to see a 

veteran doctor, that they have an ability to at least get their prescription drugs. 

And Mr. Chair, I hope that—I have also introduced a bill, as 

have many other people—I hope that we can look at some of those 

bills and see if we can combine those and actually introduce a bill 

later on, after this hearing. Because I think it is critically important, again, that we treat our veterans—we said we were going to 

give them health care. The very least we could do is make sure 

that they get prescription drug benefit. 

Commander Banas, again, thank you for being here. What I hear 

is—and I guess I want to know how you would respond—that people say, ‘‘Well, the VA should be spending its money on serving veterans currently in the system, and reducing their waiting time, instead of providing a prescription-only benefit. 

Do you think it’s possible, under the current budget, the VA 

could achieve all of these goals, and——

Mr. BANAS. Yes. 

Ms. HOOLEY. Okay. 

Mr. BANAS. Yes, ma’am, because if this were—depending on how 

the Secretary would approach this, if it’s on a cost basis, if you 

have the $7 fee for prescription, or if he chose to make a medicine 

that cost the VA $49 the cost of that medicine to the veteran, it’s 

a self-sustaining thing, and it’s not an issue of affecting the budget 

in that perspective. 

It would save an immense amount of money in the human side, 

when you look at—you know, if you take a VA dollar, you have 

$.25 of that dollar that goes to the unions or to the people who 

treat and care for the people, it just unloads a lot of time. It takes 

a lot of the burden off of the back of the VA, in that perspective. 

Ms. HOOLEY. Well, I hope we can accomplish this. I think it 

would be a giant step forward. 

Mr. BANAS. I believe it would be. 

Ms. HOOLEY. Thank you both for being here. 

Mr. BANAS. Thanks. 

Dr. HONG. Thank you. 

Mr. SIMMONS. Thank you very much. Mr. Strickland. 
13

OPENING STATEMENT OF HON. TED STRICKLAND 

Mr. STRICKLAND. Thank you, Mr. Chairman. Mr. Chairman, I am 

not terribly good at math, but I believe under the scenario that was 

outlined regarding Mr. F and Mr. M, Mr. F pays $5,904 more per 

year than an individual who has provided comparable service to his 

country. 

Now, that is unreasonable. It is unfair. It is irrational. And I 

think the veterans have a right to expect us to fix that problem. 

Also, according to my calculations, you can make as little as $24,000 a year and be a priority eight veteran. So that means that 

more than one-fourth of a priority eight veteran’s total income may 

be going just for the medicine. And you have said something here 

that I think is startling. 

Doctor, in your professional opinion, a veteran lost his life because cancer went from lungs to lymph nodes due to a delay in receiving care. I mean, that is something that ought to make all of 

us incredibly concerned. 

And if I could just say one more thing, Medicare is—you know, 

the Medicare bill begins in 2006, the discount card is due this summer. My understanding is that the projections, that the cost of prescription drugs next year is projected to increase 18 percent. So, I 

mean, when and where is it all going to end? 

I think—Mr. Chairman, I know where you are on this issue. I 

have no—you know, the problem is in this committee we preach to 

the choir. And somehow we have got to penetrate the larger Congress about these problems. Because I think we all understand the 

problem. 

But to hear you say that you are aware and that you have discussed with the commander a veteran whose cancer spread perhaps 

because of a delay in treatment, is just unacceptable that is—something has got to be done about that. Would you respond to that? 

Dr. HONG. Yes, sir. The case that we talked about, we talked 

about the delay, probably has got nothing to do with the prescription drug benefits, but it is just one particular issue that happened 

in a VA facility. 

But I want to expand further about Mr. F, because I talked about 

his prescription bill, which cost him $642 a month. Now, obviously, 

at this time he cannot get into the VA, because he has already 

been shut out. Had he been able to get into the VA, he would just 

have paid something like $42 a month. 

But if this bill should pass, Mr. F would pay $154.95 for the 

same prescription, though the VA at cost, and it would provide him 

a substantial savings. And these are the kind of benefits that we’re 

asking for from this committee. It’s a benefit for veterans that have 

already been excluded, that at this time are not getting anything 

at all. And there is a substantial amount of those veterans. 

This is not going to change the entire VA system. It’s not going 

to add any more money, or it’s not going to make the VA spend 

more money for these VA that are not receiving anything at this 

time, it is just giving them the benefit at cost of what it would cost 

the government to provide them those prescriptions. 

The Department of Defense and the VA are in a very, very 

unique position. They can get these medications a lot cheaper than 

they would be able—than retail pharmacists would be able to get, 
14

a substantial amount of savings that could be passed on to these 

veterans that are, at present, not getting any benefit whatsoever. 

Mr. STRICKLAND. So, Doctor, would you—given that scenario, 

would you say that the VA would not have to spend more money? 

Dr. HONG. The VA would not have to spend any more money. 

Mr. STRICKLAND. So I can’t imagine anyone thinking this is a bad 

idea, except maybe the pharmaceutical companies that would like 

for that veteran to go to a private pharmacy, or, you know, another 

source so that they would have to pay more. That is interesting. 

Now——

Dr. HONG. Well, it would give you—it would raise that question 

that of if the veteran is not going to get it from the retail pharmacy 

and get it from the VA facility, then it would certainly cut back 

some of those——

Mr. STRICKLAND. The pharmaceutical industry would get less 

money, I would assume. 

Dr. HONG. Probably yes, sir. 

Mr. STRICKLAND. I appreciate the smile on your face, Doctor. 

Thank you. 

Dr. HONG. Thank you. 

Mr. SIMMONS. Thank you, Mr. Strickland. And I appreciate your 

remarks. In particular, as the panel has presented, your concept, 

it’s very simple. And I remember from my Army days, my drill sergeant saying, ‘‘Keep it simple. Keep it simple, stupid.’’ And I guess 

that’s what we’re trying to do here, is to come up with something 

simple that doesn’t create a burden, but helps those veterans in 

need. Mr. Boozman? 

Mr. BOOZMAN. Nothing. 

Mr. SIMMONS. Mr. Bradley? 

Mr. BRADLEY. Same. 

Mr. SIMMONS. Okay. Gentlemen, does anyone have an additional 

question for our panel? I know that Dr. Hong is on his way to a 

family vacation, so I don’t want to delay him too long. Any further 

questions? 

[No response.] 

Mr. SIMMONS. Hearing none, thank you both very much for being 

here today. We truly appreciate your testimony. 

The next panel involves Dr. Jonathan Perlin, who is a medical 

doctor, Deputy Under Secretary for Health, testifying on behalf of 

the Department of Veterans Affairs. Dr. Perlin is accompanied by 

Michael A. Valentino, the VA’s chief consultant for pharmacy benefits management, and Barbara J. Manning, program analyst for 

VHA’s policy and forecasting service. 

I welcome all three of you to the panel, and I would ask Dr. 

Perlin if he would proceed. 
15

STATEMENT OF JONATHAN B. PERLIN, M.D., DEPUTY UNDER 

SECRETARY FOR HEALTH, DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY MICHAEL A. VALENTINO, CHIEF 

CONSULTANT, PHARMACY BENEFITS MANAGEMENT, DEPARTMENT OF VETERANS AFFAIRS; AND BARBARA J. MANNING, PROGRAM ANALYST, POLICY AND FORECASTING 

SERVICE, DEPARTMENT OF VETERANS AFFAIRS 

Dr. PERLIN. Good morning, Mr. Chairman, Mr. Rodriguez, members of the committee. I am pleased to be here with you this morning to testify on our transitional pharmacy benefit program, which 

I will refer to as TPB. 

In recent years, the VA has been challenged to meet the demand 

for medical care services, especially in some areas of the country. 

VHA has worked diligently and aggressively to reduce the list of 

patients waiting for their first clinic appointment. As a result, I can 

report that VA’s efforts and improvements in managing clinic wait 

times have been substantial. 

Despite this progress, however, some geographic areas continue 

to have wait lists for primary and specialty care appointments. To 

respond to concern that some veterans endure a financial burden 

for required prescriptions while waiting for a VA appointment, VA 

implemented the transitional pharmacy, or TPB, program. 

Under this program, VA fills prescriptions from private physicians until a VA physician examines the veteran and determines 

an appropriate course of continuing treatment. This benefit was 

made available to veterans who were enrolled and requested their 

initial primary care appointment prior to July 25, 2003. And as of 

September 22, 2003, had still been waiting more than 30 days for 

their initial primary care appointment. 

Generally, we found that veterans appreciated the benefit. However, total participation was lower than expected. Due to the rapid 

start-up of the program, and the lack of existing software support, 

there were challenges in accurately identifying TPB program participants and the associated workload. 

However, we do know that 8,298 veterans, who are about 20 percent of the 41,167 eligible veterans on waiting lists at that time, 

opted to use the TPB benefit program. 

In addition, because the TPB non-formulary prescriptions necessitated the VA pharmacist contact the private physicians to suggest 

TPB formulary alternatives, there was a significant increase in the 

labor and time required to process prescriptions. 

In contrast to the 3 percent non-formulary prescriptions in VA 

comprehensive care, 42 percent of prescriptions initially written 

were for non-formulary agents. Pharmacists’ negotiation with private physicians reduced this to 27 percent non-formulary. 

Due to congressional and veteran interest in a VA prescriptiononly benefit, Secretary Principi requested that VHA survey veterans’ attitudes toward a potential prescription-only benefit. The 

survey was designed to provide data to support the development of 

sound actuarial projections for enrollment, utilization, and expenditures for a prescription-only benefit. 

VHA commissioned a survey of 1,800 veterans by phone in January and February of this year. Veterans were asked whether they 

would choose to enroll in a prescription-only benefit. Veterans were 
16

also queried to explore the impact of different co-payment levels on 

their choice. We collected data to enable us to identify those characteristics that influenced veteran responses. 

We presented some preliminary results in our formal testimony 

and at an impromptu staff briefing yesterday. However, more indepth analysis of the survey results is necessary to fully understand and quantify the implications with regard to potential enrollment and cost for the prescription-only benefit. 

Let me share some summary statistics. Eighty-nine percent of 

enrollees would choose comprehensive VA care over a prescriptiononly benefit. More non-enrolled veterans would choose comprehensive VA care—42 percent—than would choose prescription-only 

benefit—19 percent. 

Twenty-nine percent of non-enrolled veterans said they were 

likely to enroll in VA for health care, but not prescription-only benefit. Thirteen percent of non-enrolled veterans expressed interest in 

both VA health care and a prescription-only benefit, and seven percent expressed interest in this prescription-only benefit, but not VA 

health care. 

Interest in the prescription-only benefit drops when specific co- payments are mentioned. When offered with a co-payment of $10 

or less, only 6 percent of enrollee users, 14 percent of enrollee nonusers, and 15 percent of non-enrolled veterans are likely to enroll. 

Based on our experience with the transitional pharmacy benefit, 

per enrollee drug costs and administrative costs could be expected 

to be higher, due to the adverse selection of sicker patients, the 

higher drug utilization associated with those patients, and significant numbers of off-formulary scripts, or prescriptions, expected 

when VA fills prescriptions written by private providers. 

VHA staff, with assistance from a private sector actuary who develops enrollment and expenditure projections for VA health care 

are currently analyzing the results of the survey in greater detail 

now. When this analysis is completed, we will brief the Secretary 

on the results of the survey, and publish a final report. 

In conclusion, the transitional pharmacy benefit program reduced 

the financial burden of prescription medications for patients waiting longer than 30 days for an initial primary care appointment. 

It increased their ability to accommodate new enrollees. The temporary program also provided valuable information about the increased labor requirements and non-formulary drug costs associated with filling prescriptions from non-VA physicians. 

Mr. Chairman, in closing, I believe that VA is one of the leading 

health care providers in the United States, in terms of safely, effectively, and efficiently, integrating the provision of pharmaceuticals 

in its comprehensive patient treatment programs. VA continues to 

study alternative models for provision of a prescription benefit for 

veterans. 

This completes my statement, sir, and my colleagues would be 

happy to answer any questions that anybody might have. Thank 

you. 

[The prepared statement of Dr. Perlin, with attached survey 

questionnaire, appears on p. 58.] 

Mr. SIMMONS. Thank you very much for that testimony, and I 

thank the VA for engaging in this exercise, not only providing the 
17

temporary benefit for those folks, those veterans waiting on the list 

more than 30 days, but also for doing the study. 

As I read the—your testimony on the program, you did encounter 

increased labor costs when a veteran was accessing the formulary 

for, let’s say, a non-generic drug or a drug that was not on the formulary. Therefore, you had to process that, and that was an increased cost. 

Dr. PERLIN. Yes, sir. Let me define some of the terms. The formulary is that list of drugs that we review in VA and we will use 

for VA patients. We make choices in that, in not choosing all medications, but within a class of drugs. 

For drugs that are similar, let me just use a soft drink metaphor, 

Pepsi or Coca Cola. If they are really identical, we will choose the 

one that’s equally effective. If one is better, we will choose the one 

that is more effective. But if two are equal, we will choose the less 

expensive. 

By doing that, our research has certainly gone farther in terms 

of the treatment of all veterans, or the treatment for any particular 

veteran. But we have been able, by virtue of doing that, and despite the tremendous inflation the order of which Mr. Strickland 

mentioned—I think he said 18 percent next year—to, over the past 

4 years, have increases of really less than 10 percent, despite more 

drugs per patient and increased ingredient costs per patient. 

So, we have been really able, with a scientifically managed formulary process, to control our costs to make sure veterans get the 

best possible medications. 

Mr. SIMMONS. I appreciate that. I think that, as I understand 

what Commander Banas and Dr. Hong are saying is what they feel 

is that for those—certainly most veterans want full health care, 

and they want the pharmacy benefit that goes with it. 

But as you know, we have a situation today where not all veterans can access the system. Given that situation, how do we accommodate those veterans who have standard pharmacy costs for 

chronic disease management and illnesses? Do they have an opportunity to access the system? 

As I understand your program, you did encounter some labor 

costs related with managing this new temporary benefit. But if 

we’re talking about a proposal that is cost-neutral, then those 

would be absorbed in an increased co-pay for the priority sevens 

and eights, presumably, or in some other mechanism to keep that 

revenue-neutral. Is that beyond the realm of possibility, in your 

view? 

Dr. PERLIN. I think the transitional pharmacy benefit was very 

educational, in terms of learning how costs would be generated. 

We, obviously, were less effective, in terms of negotiating back to 

our own formularies, than we might have been. So I think we can 

agree that we can anticipate a greater reliance on non-formulary 

medications. That would certainly be a higher cost. 

We are very fortunate in VA—and if anyone hasn’t seen it, I invite you to join me at Washington’s VA to see our electronic health 

record. This really is critical in terms of keeping the costs tight, the 

cost management tight, and providing safety and quality. All of the 

prescriptions are entered electronically, whereas any one of us in 
18

America could expect a chance of having orders entered electronically of about eight percent. 

In VA, 94 percent of all pharmacy orders today are entered electronically, often with decision support, assuring right medication, 

most often with—error checking, assuring that the patient doesn’t 

have an allergy. That electronic information comes across to automated robotic dispensing, and ultimately to outpatient pharmacy 

management. 

My point is that there is this incredible opportunity for quality, 

safety, and efficiency, by virtue of having everything electronic. So 

a second feature of cost would be the management of paper that, 

unfortunately, we could not manage electronically. 

Theoretically, sir—and to the point of your question—could something be done that’s cost-neutral? And I’m just speaking personally. 

If these other costs were considered—and you know, I think none 

of us would want to do anything that diminished care to those most 

vulnerable: service-connected disabilities, those who were impoverished—if there were firewalls to assure that those were never—I 

think that the logic would speak for itself. 

Mr. SIMMONS. So the answer is yes? 

Dr. PERLIN. With those provisions, sir, I would have to agree 

with you. 

Mr. SIMMONS. The answer is yes, and I thank you for that. And 

I realize you caveated your response by saying ‘‘speaking personally,’’ and I appreciate that. And we all know what that means. 

I would love to visit your facility, and I think it’s—my understanding is the way VA runs its pharmacy business, it’s high-tech, 

and it’s state-of-the-art, and there is no doubt about that. And I 

would love to see how you do those electronic entries. I think that 

would be very important. 

At the same time, my fundamental concern here is how can we 

provide a fair pharmacy benefit for those veterans who have served 

who are kept out because, basically, of a regulatory decision? How 

can we provide them with fair access? And you heard the previous 

panel, so you know what we’re getting at. 

On the survey, I find it interesting and useful, and I think that 

the survey respondents told us what we probably already know, 

which is most veterans want the whole enchilada, if you will. But 

for those veterans who are out of the system and looking in, I think 

what we discovered was that 19 percent are interested in choosing 

a prescription-only benefit. From a percentage standpoint, that’s a 

low percentage. 

But if you factor it out to the total veteran’s population, that is 

four million veterans, so that’s not an insignificant number of people who are saying to you, through your survey, ‘‘You know, I’ve 

got my own doctor, I’ve got my own situation, but I really would 

like a pharmacy benefit, and as somebody who has worn the uniform, I think I have earned that.’’

So, I think that is a significant number of veterans. And I see 

the red light, so I defer to my colleague, Mr. Rodriguez. 

Mr. RODRIGUEZ. Thank you, Mr. Chairman. Let me, first of all, 

thank—and as the chairman has indicated, I think the majority 

would prefer everything, but I would have some concerns with the 
19

survey that you did, because I know that the proposal also talked 

about the disparity of services from one region to another. 

And so, if I don’t have access to health care in one area, well 

heck, I’m going to say I will be okay with just getting prescriptions 

if I could get that. And so, depending on where exactly it’s at, I 

don’t know if your survey, pinpoints maybe by members’ congressional districts, I think that would probably mean a lot more. So 

if you have that in that form, I would be interested in that. 

Because if they say they don’t particularly care for that and they 

have got a major hospital there, then I would be interested to know 

that. But if they don’t have any services available, then they might 

say, ‘‘Well, at least I can get something.’’ I am also interested in, how you advertised for those that have 

to wait 6 months or so, and you might be able to comment on how 

you reached out to those individuals, and how you informed them 

about eligibility to qualify for those, prescription drugs. 

Dr. PERLIN. Well, thank you sir, and let me agree that the information you request by district would likely vary geographically—

let me ask Barbara Manning if we can actually prepare that, certainly by state, anyway. 

Ms. MANNING. For the prescription-only survey, we have a—we 

don’t have a large sample size. It was really designed to give us 

national-level responses. And so, you—— Mr. RODRIGUEZ. Do you know what the sample size was, and—— Ms. MANNING. Eighteen hundred vets. 

Mr. RODRIGUEZ. Eighteen hundred throughout the country, or 

just a region? 

Ms. MANNING. Throughout the country. There were 600 enrollee 

users, 600 enrollee non-users enrollees who did not use any health 

care in 2003, and 600 non-enrolled veterans. And those allow credible sample sizes at the national level. 

Dr. PERLIN. There is a 95 percent confidence interval at those 

numbers at the national level. There is a two percent margin of 

error in either direction—in terms of enrollees, 600 non-enrollee 

patients—I’m sorry, enrollee patients, 600, and 600 others who 

were enrolled but not using the system. So, four percent confidence 

or margin of error around each of those numbers. But the numbers 

have a greater margin of error as they get down to lower rates, but 

we will put together whatever information we can. 

Let me come to your other part of your question, sir, which was 

the question of how we reached out to those veterans who were, in 

fact, eligible. We actually used our waiting list information to identify all individuals who were potentially eligible, and we took that 

run and we mailed a letter to each and every individual, the best 

address that we thought we had for that individual, to notify them 

of this benefit. 

During that period of time, I am pleased to report that there was 

substantial progress on the waiting list. Regarding the way that 

particular benefit was framed, it was a group of individuals who 

had been waiting, as of a certain point. 

The idea of this was that we really wanted to learn about the use 

of the benefit itself, and so it was sort of circumscribed, because I 

think the study of a decade ago really—their own experience, if you 

build it they will come, and that’s a good thing. But we wanted to 
20

learn before we unleashed, and what we learned was a great deal 

that we can discuss today about who we would use. 

But it was a limited number of individuals. The initial pool actually decreased substantially between the time of the announcement 

of the benefit and when the benefit actually started. Despite a letter to each individual, we’re pleased to have made great progress 

on the waiting list for that. I think the committee knows and appreciates—and we appreciate your support in working down the 

waiting list. We still have, as you note, some geographic challenges 

there. 

Mr. RODRIGUEZ. We have a serious problem. You know, I know 

in the border—they were just telling me about another study that 

was done on the Mexican border, in McAllen, and that area in Hidalgo County, and they identified that 50 percent of the people 

were getting their prescriptions from Mexico, 50 percent of those 

without insurance. 

And so it was individuals that didn’t have any insurance that 

were going to Mexico. So we got a real problem in this country, in 

terms of not being able to provide access to good prescription drugs 

not to mention for our veterans, also. 

Let me ask you, because I know on H.R. 1309, that we wanted 

to push forward, one of the arguments was to wait and to see what 

we were going to do with the Medicare bill. We have already done 

that. Do you have any comments on that, because I know that 

there are some huge gaps there, and I don’t know if it’s going to 

help any of our veterans, but have you all done any assessments 

on that? 

Dr. PERLIN. Well, thank you, sir. We were actually trying to put 

together some information from our private sector actuary on the 

effect of the Medicare bill on VA use. It’s a little bit difficult to try 

to second-guess, because as you know, the final regulations haven’t 

been published. 

Preliminary evidence suggests that there may not be tremendous 

differences, but I would be remiss in overstating what we know 

thus far. We anticipate a report from our actuary in about 4 weeks, 

just based on some current assumptions and an analysis about 4 

weeks after that, we would be pleased to share with committee and 

staff. 

Mr. RODRIGUEZ. Just going to close that, we have gotten an indication that the VA officials have reviewed H.R. 1309 and have determined that it contains no provisions that will impact on the VA’s 

pharmaceutical procurement costs. 

Dr. PERLIN. Thank you. 

Mr. SIMMONS. I thank the gentleman. We will anticipate, then, 

getting that actuarial analysis in about 4 weeks. Is that correct? 

Dr. PERLIN. That’s right. Eight weeks total. We should get back 

some raw numbers in total, and then have for analysis——

Mr. SIMMONS. And it’s my understanding you’re also waiting for 

some final actuarial analysis on your survey results. 

Dr. PERLIN. Yes, sir. 

Mr. SIMMONS. If we could have that as well. 

Dr. PERLIN. Absolutely. And as you suspect, the two are interlinked. 

Mr. SIMMONS. Thank you. Ms. Brown-Waite? 
21

Ms. BROWN-WAITE. Thank you very much. Thank you, for the entire panel, for being here. 

In reading the testimony on page 6, it says, ‘‘Seventy percent of 

enrollees say they intended to use VA as primary source of care or 

back-up to non-VA care.’’ Dr. PERLIN. Yes. 

Ms. BROWN-WAITE. Could you break that 70 percent down? In 

other words, how many of them are going to use the VA as primary 

care, or how many of them are going to use it as back-up to nonVA care? 

Ms. MANNING. Okay. A little background. We, every year, do an 

enrollee survey. That has a huge sample size of about 38,000. We, 

this year, asked them a new question, which was, ‘‘How do you intend to use VA in the future?’’ And 70 percent of enrollees said that 

they intended to use VA as a primary source of care or a back-up. 

Ms. BROWN-WAITE. If I may continue, Mr. Chairman? But that’s 

exactly the question. How many of that 70 percent are using the 

VA as a primary source versus a back-up? There is a big difference. 

I know in my area, for example, on Monday a veteran may go 

to a veterans’ clinic, and the following Monday he uses Medicare, 

he or she uses Medicare. Tell me what percentage are using the VA 

solely as the primary care. I’m from Florida, I have a very high 

senior population. 

Ms. MANNING. I can provide it. I don’t have that with me today, 

but I certainly can provide it. I have it broken out. We tried to provide a very sort of high-level analysis today, and we would be glad 

to provide it later. 

Dr. PERLIN. This survey is brand new. Let me get back to you 

with our survey of utilization and reliance. Just as the discussion 

this morning has—we discussed about the opportunity for veterans 

potentially to use benefits and Medicare, or in VA, I think we’re 

well aware that veterans are using health care in multiple sectors 

simultaneously. So, let me get back to you, if I may, with information for the record on the reliance outside of VA and within. 

One statistic that I can share with you this morning is that on 

our previous surveys, the veterans who indicated their use, their 

intention to use VA for primary care and prescriptions, 25 percent 

went on to use subspecialty care or inpatient care. 

And so, sometimes on the surveys there is the asterisk. I think 

we have to be aware of is that the initial intent to use only for a 

prescription or as a back-up is often overtaken by reality, which 

may be a finding of really liking the integrated and comprehensive 

care, or other economic circumstances. 

But many who come initially for one reason end up using a 

broader array of services than perhaps they anticipated. 

Ms. BROWN-WAITE. Could you also break down that statistic to 

the VISN eight area? I would like it for nationwide and also for the 

VISN eight area, if you have that kind of specificity. 

The other thing is that the survey that you took indicated that 

89 percent of enrollees would choose comprehensive VA health care 

over the prescription-only benefit. Did your survey attempt to distinguish between those veterans who are enrolled in a region that 

have long wait times, versus a veteran able to obtain fairly prompt 

care? 
22

And if not, would you imagine that this would be a substantial 

factor in a veteran’s choice? In other words, if he or she can get 

in fairly soon, does that influence their choice? 

Dr. PERLIN. I think your question is very well taken, which is 

that one might rationally be expected to have a greater interest in 

pharmaceuticals if they are enduring a very long wait. And in fact, 

that entirely was the intent behind the transition pharmacy benefit, not to penalize someone for our own inability to accommodate 

them in a timely fashion, relief of economic burden. 

At this level, the survey was really done to take stock of the general interest by three groups: by those veterans who are using the 

system, to address some of those questions raised, whether veterans who are actually in the system came in just for pharmacy 

benefit or, in fact, want other care; if those individuals who are enrolled but not using the system, who may in one sense have VA or 

be conceptualizing of VA care as a back-up; and those individuals 

who are currently not enrolled. And the survey doesn’t distinguish 

at that level. But your point is well taken. 

Ms. BROWN-WAITE. One other question. Many officials in VA privately tell me that they believe that it’s 50 to 60 percent of duplication of effort in certain regions, particularly in regions where there 

are more seniors. 

Therefore, I am really interested in the break-out of the VISN 8. 

And also, could I have a complete list of the survey questions? 

Dr. PERLIN. I would be pleased to submit that today, for the 

record. 

Ms. BROWN-WAITE. That would be great, thank you. Thank you, 

Mr. Chairman. 

Mr. SIMMONS. Thank you. And I think the survey questions are 

in the possession of the subcommittee staff. If not, they will certainly get them to you. Ms. Hooley? 

Ms. HOOLEY. Thank you, Mr. Chair. Dr. Perlin, we have been 

talking about—for a long time talking about—VA pharmacy benefits. And we don’t know yet how Medicare is going to impact our 

veterans. And that’s going to—what did you say? How long is that 

going to be before that comes out, do you think? 

Dr. PERLIN. About eight weeks before we have some preliminary—based on regulations. 

Ms. HOOLEY. How much does the VA save by negotiating the cost 

of their drugs, would you say, over the average price, if I go to my 

neighborhood drugstore? 

Dr. PERLIN. I’m going to turn this question over to Mike 

Valentino, director of our pharmacy benefit program. 

Ms. HOOLEY. Good. 

Mr. VALENTINO. Thank you. 

Ms. HOOLEY. Welcome. 

Mr. VALENTINO. Thank you. It really varies. It really varies by 

drug class. And the first discount that we get is a statutory discount through the federal supply schedule which is a 24 percent 

discount off of the non-federal average manufacturer’s price. 

Ms. HOOLEY. Okay. 

Mr. VALENTINO. So that’s where we start. And then we are able 

to derive additional discounts through our formulary management 

process. As Dr. Perlin mentioned, there are situations within a par-
23

ticular therapeutic drug class where there are multiple alternatives 

that are substantially safe and effective, and we may choose Coke 

and not the Pepsi. 

In those situations, the discounts vary, depending on how similar 

the drugs are and how many alternatives there are. But our experience has been anywhere from 25 to 50 percent additional discounts. 

And the range is wide, and it’s very situation-specific. 

Ms. HOOLEY. So, if you have certain circumstances that there is 

only two drugs, you’re obviously going to pay more for those. If 

there are four or five, you can then really knock those prices down. 

Mr. VALENTINO. Yes, ma’am. And when there are two drugs, we 

would be more towards the lower range. 

Ms. HOOLEY. Right. 

Mr. VALENTINO. The 25 to 50 percent, as opposed to the upper 

range, where there may be six or seven or eight drugs. 

Ms. HOOLEY. Okay. Thank you very much. 

Mr. SIMMONS. Mr. Boozman? 

Mr. BOOZMAN. Yes. In reading and listening, there is the implication that there is an increased cost by conversion problems, you 

know, when things aren’t on the formulary and stuff. 

I guess, you know, there are a significant number of people that 

go to their Medicare doctor, get a prescription, go to the VA, see 

the VA doctor. How is that any different than him doing the conversion process, versus—I mean, I don’t understand that. 

Dr. PERLIN. Mr. Boozman, your question is very well taken. That 

conversion process would happen, actually, by a physician or pharmacist. 

Let me use an example. And I am proud to say that I continue 

to see patients over at Washington VA. And if a veteran came in 

with one anti-hypertensive and we had an equivalent to that but 

it wasn’t the one that was initially prescribed, we would talk about 

that, perhaps the pharmacist would talk about it. 

It’s a little bit easier to manage not one-to-one, because the communication is not intermediated. In terms of a physician calling in 

from the outside and talking to a pharmacist in the VA, you know 

frankly, they are less apt to be convinced. I want my patient to 

have this, not that. 

And I mean, we don’t choose arbitrarily. We really choose those 

drugs that are either proven to be more effective, or equally effective and less expensive. So we have—we absolutely value the ability to save our resources for veterans by making sure that, given 

all else being equal, we have the best and least expensive drugs. 

Mr. BOOZMAN. So, if they see their Medicare doctor, and then 

they go to the VA, do they see a VA physician? 

Dr. PERLIN. Yes, they do, sir. 

Mr. BOOZMAN. Okay. Now, does that VA physician, will he switch 

them himself to the formulary, or does he go back to the doctor 

and——

Dr. PERLIN. Generally, the physician will switch the patient 

there. It becomes not negotiated, but reasonable, and——

Mr. BOOZMAN. Okay. Is there any—as opposed to doing it the 

other way, you have a less percentage. I mean, did you figure in 

the amount of doctor time? I mean, what’s the cost savings of that 
24

patient not seeing a doctor, versus talking to a pharmacist on the 

phone? 

Dr. PERLIN. Right. Clearly, one would have to account for the 

time that would be used to make the transfer by the physician in 

a clinic visit versus a pharmacist by phone. 

In this instance, I absolutely agree that there is an offset there. 

The concern is that the doctor, by virtue of the ability to autonomously switch to an identical agent, is able to effect the decision— end up with two to three percent being within formulary. 

The negotiation often times—and you can imagine the telephone 

tag, and the amount of labor, and the frustration —only resulted 

in coming down to about 27 percent. 

Mr. BOOZMAN. Right. But the question is, you know, what is the 

savings compared to paying the doctor, using his time, versus the 

other? 

Dr. PERLIN. Yes, I——

Mr. BOOZMAN. Now, you know, I know the others might be a little more hassle, you know, but the bottom line is it’s got to be 

cheaper to do it the other way. 

The other thing is is that the—you know, what you hear all the 

members talking about are the wait times. And then again, that’s 

got to directly affect the wait times, when you’ve got a physician 

dealing with someone that wants to be in the VA system that 

hasn’t seen another doctor, as opposed to feeling like they have got 

to run and—see what I’m saying? 

Dr. PERLIN. Right. I think there is a trade-off of cost. I wouldn’t 

want to over-estimate it. I know we have had some ongoing discussion with the Inspector General, and the report was referenced earlier. That was a bit of an anomaly. That was extrapolated from 

Florida, a group that was systematically different. The savings 

were overstated substantially. 

Mr. BOOZMAN. Well, I think, too, you have to look at where you 

do your survey. Now, if you do it in a rural state, like Arkansas, 

where people have to travel, okay, versus the other, you’re going 

to have much higher use of them using their Medicare physician 

in their home town, mailing in their prescription, and I’d say the 

cooperation rate will be pretty good if it saves them, you know, a 

several-hour trip in some cases. 

But it just makes sense. How many patients do you feel like that 

are seen in the VA just because of the prescription drug benefit? 

Dr. PERLIN. Clearly, there is—seeing patients, and augmenting 

the survey with my own real-life experience, there are some small 

number who, by virtue of really the oppressive costs, given their financial circumstance, come to VA to get those prescriptions. 

And I think in the transition pharmacy benefit, perhaps one of 

the greatest learning points was the fact that that number that ultimately used that benefit was not terribly different than the number the survey and the preceding surveys of enrollees suggested. 

And so, somewhere in rough terms, between 10 and 20 percent, 

that number—the thing that concerns me about that is the number 

expressing interest went down substantially when a co-pay were 

part of the equation. And so we would need to consider that. 

Mr. BOOZMAN. What are we hearing, as far as—you know, we 

have had several testimonies, as far as, you know, the people that 
25

use the VA and have dual doctors and things for the prescription 

drug benefit. It’s significantly higher than that, isn’t it? 

Mr. BRADLEY. Thank you, Mr. Boozman. We have had testimony 

from both the Secretary and the Under Secretary for Health concerning this topic and both of them have acknowledged there is a 

significant demand by veterans for a prescription-only benefit. But 

I do recall the Secretary testifying that he did not think it was a 

overriding situation in regard to VA demand for care. 

Mr. BOOZMAN. Okay. What I would like is the—again, in your 

calculations—I really would like to see the doctor time, as far as 

money figured in, okay? And then also, some sort of a prediction 

that if you did cut it 10 or 15 percent, if you eliminated 10 or 15 

percent of those visits, what that would do to the wait times in 

some areas of the country. 

Dr. PERLIN. Great, thanks. 

Mr. BOOZMAN. Thanks. 

Dr. PERLIN. With your permission, we would include also the expected participation, if that were an option. 

Mr. BOOZMAN. Yes, and again, I think you need to look at various areas of the country, as far as this—a real metropolitan area. 

Dr. PERLIN. Right. The survey, just for the record, was a nationally representative sample. But I do appreciate your point about 

systematic differences between urban and rural areas in some of 

those circumstances. 

Mr. SIMMONS. Dr. Snyder? 

Dr. SNYDER. Thank you, Mr. Chairman. Doctor, you had—I think 

when you were talking with Mr. Strickland—talked about your, the 

VA’s, pharmaceutical inflation rate of being around 10 percent for 

the last 4 years, is that correct? 

Dr. PERLIN. That is correct, sir. 

Dr. SNYDER. That’s an annualized rate? 

Dr. PERLIN. No, that is over the entirety of the 4 years. 

Dr. SNYDER. Really? 

Dr. PERLIN. We have, over a period of 51 months, gone from 

about $13 to about $14.50 on—as an average total for a 30-day 

equivalent cost. Is that right, Mike, the number? 

Dr. SNYDER. That’s almost magic. 

Mr. VALENTINO. Yes, that’s correct. 

Dr. PERLIN. Well, for the magic—you know, I’m glad, thank you 

for that, we’re very proud. And as you have seen, this has been 

taken note of in Time Magazine and USA Today. 

Dr. SNYDER. Yes. 

Dr. PERLIN. And it’s really this combination of efficiency and 

some of the processes with the automation and the ability to manage the utilization, making sure that the veterans get the best 

there, and——

Dr. SNYDER. Is there any other plan, public or private, in the 

country that’s doing that well? 

Mr. VALENTINO. Not that we’re aware of, sir. 

Dr. SNYDER. Yes, I’m not either. I want to ask you, one of the 

things about—in the spirit of efficiency, also. You have the doctor 

fill out a form. Why does the doctor have to fill out a form? 
26

Dr. PERLIN. That has to do with the fact that, in point of fact, 

we have not operated as a pharmacy before. And I assume the form 

you’re referring to is in terms of the transitional pharmacy benefit. 

Dr. SNYDER. Yes, I’m sorry, the transitional pharmacy—— Dr. PERLIN. To require information. 

Dr. SNYDER. Why can’t the patient just show up with prescriptions? Why does there have to be another—and what good does 

that form do you? How is that form used? 

Dr. PERLIN. That actually happens behind the scenes when one 

of us would take our prescription to a pharmacist. The pharmacy 

would actually have that in their databanks, by virtue of doing a 

whole lot of business. This was really our first time interacting 

with private-sector physicians. 

I’m going to ask Mike to elaborate on the requirements for filling 

prescriptions in that regard. 

Dr. SNYDER. Well, I just—I’m just trying to understanding why, 

if I’m a doctor and I write a prescription, you’ve got a database of 

the licensed physicians in this state, why, if I look at that, as long 

as there is not a suspicion that it’s a forged pharmacy, why—what 

are the advantages of having another form to fill out that says 

whatever it says? 

Mr. VALENTINO. Actually, we in VA do not have those types of 

databases. We have data on our own providers, and perhaps fee 

basis providers that we do use. 

It also allows us to collect some basic information on that patient 

that we may not have until they have their first appointment, allergy information, for example. So it’s just an effort for us to gather 

baseline information on the physician and patient that will allow 

us to provide the prescription to them. 

Dr. SNYDER. Okay. It’s not clear for me that there is actually any 

decision-making that changes because of this form that comes in 

with the patient. 

Mr. VALENTINO. No, sir. 

Dr. SNYDER. Well then, it’s just—I would think it would be a 

waste of time, but maybe not. 

I want to ask about the formulary. Forty-two percent were nonformulary drugs, and your statement is less than 3 percent for your 

VA physicians. Is that—in order for a VA physician to do something like a non-formulary drug, do they have a separate form they 

have to fill out to go off formulary? 

If that’s the case, then was there—when this plan was put together, was there any thought of—I assume your formulary is online some place, and you just say, ‘‘Hey, we’re going to fill your prescriptions, Doc Snyder, you’re sitting out there Arkansas, you fill 

it with a formulary drug or we don’t fill the prescription.’’

Dr. PERLIN. Yes, sir. Thank you for that suggestion. I made it 

myself. And we actually, in the mail-out, had a list of our top 100 

prescriptions, the most common things, know, the anti-hypertensive, those sorts of things, and we referenced a website that had 

the transition pharmacy benefit on it. 

But I can tell you, having—I cut my teeth in VA, I went to private sector and academia, came back to VA—a clinician in practice 

such as yourself is inundated by multiple formularies. And despite 

the desire to be sensitive to the patient needs, the experience is 
27

that the clinicians often write a script and let the negotiation fall 

out later. 

And so, despite our best efforts of posting a website with the prescriptions, arming the patients with a list of top VA formulary 

choices, we still have this reconciliation to do. 

Dr. SNYDER. It also brings up the point of the fact that you use 

your formulary, and I personally don’t have many complaints of 

veterans about not being able to get the medicines they want, and 

then your inflation rate is so low, and yet—I mean, that’s—I would 

not have expected that 42 percent of the prescriptions coming from 

the private sector would be non-formulary drugs, which may account for why the cost is going up in the private sector. 

Dr. PERLIN. I think that’s a very good point, because, in fact, in 

some areas such as a class of beta blockers or calcium channel 

blockers, there are so many different agents that the opportunity 

to prescribe something that’s not is pretty substantial. Mike, you 

want to——

Mr. VALENTINO. Yes, I think that, we have done a good job with 

the contracting of our drugs, but I think we have realized a very 

large portion of our savings through developing evidence-based prescribing guidelines. And we really do take a hard look at what the 

medical evidence and literature says, in terms of safety and efficacy, which is many times, a much different message than the marketing and advertising information that’s available. 

Dr. SNYDER. They may look at what’s available in the sample 

room. 

The last question I wanted to ask was is there anything in your 

written statement today that we ought to know about that was not 

included in your written statement, for those of us on the committee and the staff that are trying to make decisions in these 

areas? Is there anything that we ought to know about that is not 

in your written statement? 

Dr. PERLIN. Well, thank you. A couple of comments. First, one of 

the things that one would want to consider is not creating a paradox where veterans who might use a pharmacy-only benefit would 

have access to a formulary that would actually offer choices that 

we couldn’t offer to those individuals who receive comprehensive 

care. It would create a strange juxtaposition of those individuals 

with service-connected disability, et cetera, unable to access certain 

sorts of pharmaceuticals. 

The reason this is concerning is because—to use your word, sir—

the ‘‘magic’’ that’s been worked, in terms of having a formulary, 

has been both effective and efficient, has been really by having a 

close and a limited formulary. So that’s not in our statement and 

is a consideration of these sorts of benefits. I would ask you to 

please consider that aspect. Thank you. 

Mr. SIMMONS. Thank you. We have all heard the buzzer. There 

is a 15-minute vote on the journal and a 5-minute vote on the 

Thompson motion. 

I guess my thought is that if I continue to march here with the 

next panel for another 5 or 6 minutes, we can recess and then I 

will return. I hope my colleague from Texas will be able to return 

to give the last panel full attention. 
28

But I did want to suggest, for the record, that the Office of Inspector General report be submitted into the record, and I make 

the comment that the Under Secretary for Health commented 

under paragraph five that ‘‘We agree with your findings that the 

cost of providing prescription drugs to priority group seven veterans continue to escalate, and that current laws and practices lead 

to redundant evaluations that impact the timely delivery of service 

to other enrolled veterans.’’ So, I think that back in the year 2000, the VA did identify the 

bones of the problem that we’re discussing now. I agree that VA 

has made some dramatic improvements in how it functions. What 

we’re looking at is broadening the scope of those who can take advantage of that. 

And on that basis, I appreciate very much your testimony, and 

would consider actually coming down to the Washington VA to see 

how you do it, and bringing as many of my colleagues as are interested to come along for an hour or so, probably after the Easter recess. With that, I thank you for your testimony and would ask the 

third panel to prepare themselves. 

Dr. PERLIN. Thank you, sir. 

Dr. SNYDER. Thank you. 

Mr. SIMMONS. Panel three involves testifying for the Vietnam 

Veterans of America, Mr. Rick Weidman, who is director of government relations, William Carl Blake, who is the associate legislative 

director of the Paralyzed Veterans of America. And representing 

the Disabled American Veterans is Ms. Joy J. Ilem, the assistant 

national legislative director. 

Mr. Peter S. Gaytan is testifying on behalf of the American Legion, and functions as the principal deputy director of veterans affairs and rehabilitation division for the American Legion. And Mr. 

Richard Jones is the AMVETS national legislative director, and he 

is presenting testimony for AMVETS. 

How much time do we have on the vote, does anyone know? Ten 

minutes. Ten minutes left. We have 10 minutes. So do we have a 

fast talker, or somebody with a short statement? I leave it to you 

to flip the coin and see who goes first. Thank you very much. Put 

on your microphone, and here we go. Thank you. 

STATEMENTS OF PETER S. GAYTAN, PRINCIPAL DEPUTY DIRECTOR, VETERANS’ AFFAIRS AND REHABILITATION DIVISION, THE AMERICAN LEGION; RICK WEIDMAN, DIRECTOR, 

GOVERNMENT RELATIONS, VIETNAM VETERANS OF AMERICA; CARL BLAKE, ASSOCIATE LEGISLATIVE DIRECTOR, PARALYZED VETERANS OF AMERICA; JOY J. ILEM, ASSISTANT 

NATIONAL LEGISLATIVE DIRECTOR, DISABLED AMERICAN 

VETERANS; AND RICHARD JONES, NATIONAL LEGISLATIVE 

DIRECTOR, AMVETS 

STATEMENT OF PETER S. GAYTAN 

Mr. GAYTAN. Mr. Chairman, thank you for allowing the American Legion to reaffirm its position on a prescription-only health 

care benefit for certain veterans. 

The American Legion believes VA’s pharmacies are very much a 

part of its integrated, holistic approach to medical care. VA’s phar-
29

macies were established to support the nation’s largest health care 

delivery system, and were never intended to become a mail order 

prescription house or the corner drugstore. 

The American Legion is concerned about the overall cost of VA 

filling a larger number of prescriptions. With the increase in enrollments since the implementation of the Veterans Health Care Eligibility Reform Act of 1996, and a projected actual increase in utilization by a traditionally older, sicker population, additional funding 

and pharmacy personnel will be required to meet the demands of 

any such benefit. 

A permanent prescription-only benefit would certainly increase 

the VA’s pharmacy costs considerably. VA’s pharmacies are already 

overtaxed, given that over four million veterans currently receive 

their prescription medications through VA. Even without enactment of a permanent prescription-only benefit, VA expended $2.8 

billion in outpatient pharmacy. 

This share is due to many factors, including increased enrollment, medical inflation, and new drug therapies. Mr. Chairman, 

while the American Legion agrees with the need to ensure veterans 

receive prescriptions in a timely manner, we fear the possible detrimental effects a prescription-only benefit may have on the overall 

delivery of health care by VA. 

Veterans must be able to have their prescriptions filled through 

VA without having to join the line of more than 30,000 veterans 

currently waiting for appointments. It is our hope that the report 

on the status of the transitional pharmacy benefit presented here 

today will provide some insight into the effectiveness of such a 

plan. 

The American Legion stands ready to assist this subcommittee 

and VA in developing a pharmacy benefit that will improve the 

current VA pharmacy plan without creating new liabilities for the 

VA health care system. Thank you again for this opportunity to 

join in this informational hearing on behalf of the members of the 

American Legion. 

[The prepared statement of Mr. Gaytan appears on p. 72.] 

Mr. SIMMONS. Thank you, Peter. And I think at this point we 

will go into recess, if that’s agreeable to the panel. And we will be 

back shortly. The subcommittee stands in recess. 

[Recess.] 

Mr. SIMMONS. The subcommittee will come to order, and I thank 

Mr. Gaytan for his testimony. Who is next? 

STATEMENT OF RICK WEIDMAN 

Mr. WEIDMAN. Thank you. I just got off the telephone with your 

commissioner of veterans’ affairs for the State of Connecticut who, 

at the ceremony the other day she attended with you, caught the 

flu, sir. So she is home recuperating, and will soon be back in action. But she sends you her very warmest greetings of great respect. 

Mr. SIMMONS. Thank you. 

Mr. WEIDMAN. I would like to thank you, Mr. Chairman, and 

ranking member Rodriguez, for your inviting us to share our views 

with you here today. 
30

The first general statement is that the temporary pharmacy benefit, as intended by the Secretary in the regulations promulgated 

last year, appear to be working well. We sent out a message when 

we got word of his hearing to all of our state presidents, all of our 

national officers around the country, and to all of our service representatives. 

And the feedback was universally positive, that where it was 

being employed—and I say ‘‘where it was being employed,’’ because 

many of the waiting lists have dropped below 30 days—where it 

was being employed, it was working as the Secretary intended, and 

that the pharmacy service has done a great job. 

Second thing I would just like to note about the pharmacy service in general is that if we could get the rest of VA to be as accountable and as efficient and effective as the pharmacy service 

has become over the course of the last two decades, we would be 

in much better shape today. 

A lot of people talk about it at VA, a lot of people talk about the 

Baldwin Award, et cetera. Is is, in fact, the one part of VA that 

truly practices the Deming method of incremental improvements 

but on a constant basis, and no backsliding in making the service 

better and better, both more efficient and more effective. 

The formulary versus non-formulary issue that was brought up 

earlier today is one that does need to be addressed, and that is patterns that—where people are frowned upon if they go non-formulary. You will notice the three percent figure, which certainly 

caught our eye, and I talked to Mr. Valentino briefly, and will be 

following up with him, sir, about all too often they go with what’s 

cheapest because they’re spoken to by their supervisors, various clinicians. They claim that’s not the case, but the pattern is clearly 

there. 

There should be no need for this temporary benefit, and that is 

VVA’s position. We need proper funding for the entire system. You 

will notice I am wearing my button about health care budget reform specifically to emphasize this point, because if this is—as has 

been pointed out at this hearing numerous times—an earned right, 

that’s just one part of it. We need the dough to make it go. 

But secondly, we also need to make this truly a veterans health 

care system by beginning with every single veteran who comes to 

the VA who—currently there or in the future. You have taking of 

a complete military history and speeding up the process of putting 

that as part of the permanent patient treatment record, or the 

PTR, and used in the diagnosis and treatment. 

There are many, many veterans who are currently category sevens and category eights that, if properly evaluated, it would turn 

out that they would become ones and twos. Why? Because they actually have diseases, maladies, injuries, et cetera, that are directly 

traceable to incidents, exposures, and to diseases and exposures to 

toxins that occurred in the military. 

But we are not classifying them that way. And so, that needs to 

happen. We deserve a veterans health care system at VA, and citizens of America believe that’s what they’re buying with their tax 

dollars, and we need to enhance efforts greatly in that regard. 

It is, as I said, a veterans health care system. And if it’s not a 

veterans health care system, if it deteriorates only to be general 
31

health care that happens to be for veterans delivered by the VA, 

we will lose this system. And we will also not do right by our veterans because they will not get well. 

We have testified on this many times, and don’t wish to prolong 

that, but do want to say that this card—and we attached a copy 

of the website as an attachment to this testimony—is something 

that still is not being utilized by VA, even while they wait for the 

new architecture of the new system in the Veterans Health Administration, there is no reason why the Secretary and the Under Secretary cannot move forward now to implement a training program 

in why is military history important and what are the certain signs 

based on when you served, what branch you served in, where you 

served, what was your military occupational speciality, and what 

actually happened to you my friend, and check with those diseases. 

So, we agree with our colleagues from the DAV that the continuum of care that is both somewhat there now and can be much 

more there with existing resources even, and with the existing 

staff, simply by training, is something that should not be denied to 

any American veteran, to have them made as whole again as possible, as they would have been had they not put their life and limb 

on the line in defense of the Constitution. 

Mr. Chairman, that concludes my remarks. I wish to thank you 

again for holding these hearings, and for allowing Vietnam Veterans of America to present our views to you here this morning, 

sir. Thank you. 

[The prepared statement of Mr. Weidman, with attachment, appears on p. 74.] 

Mr. SIMMONS. Thank you, Rick. And I will defer to the panel as 

to who goes next. 

STATEMENT OF CARL BLAKE 

Mr. BLAKE. Chairman Simmons, Ranking Member Rodriguez, 

Paralyzed Veterans of America would like to thank you for the opportunity to testify today on a possible prescription-only health 

care benefit within the VA and on the transitional pharmacy benefit. 

Lacking a detailed legislative proposal, we can only make general 

comments on a possible prescription-only health care benefit. We 

have expressed concerns in the past about the expansion of prescription drug benefits. We have previously testified that we have 

serious concerns about the costs associated with expanding the 

pharmacy benefits beyond our current scope. 

Prescription drugs are an increasingly large component of medical care spending. Over the last 7 years, prescription drug expenditures have increased at double-digit rates, according to a fact sheet 

prepared last year by the Kaiser Family Foundation. 

Likewise, the rising cost of pharmaceuticals have far outpaced 

the rate of inflation. This essentially translates into higher cost to 

the VA to obtain and provide these pharmaceuticals. 

The VA does not operate in a health care vacuum. An expansion 

of the pharmacy benefit would increase demand on the system, and 

an increase in the demand would necessitate shifting scarce resources away from treating veterans. PVA believes that the VA 

would then be forced to treat fewer veterans, and might even be 
32

tempted to once again increase prescription drug co-payments, 

thereby essentially shifting the higher costs on to the backs of more 

veterans. 

Again, lacking a specific legislative proposal, we have no way of 

ascertaining the costs of expanding the pharmacy benefits or restructuring how pharmacy benefits are provided. PVA has also expressed concern that many recent prescription drug legislative proposals could change the basic mission of the VA, which is to provide health care to sick and disabled veterans. The VA does not 

need to take on the role of the veterans’ drug store. Now is not the 

time to take chances with the lives and health of veterans by dramatically and fundamentally changing the nature of the VA health 

care system. 

PVA fears that if we embark upon this path of only providing 

certain health benefits to certain categories of veterans, we could 

very well see the erosion of the VA’s mission. The VA would essentially revert back to the way it provided care and services prior to 

eligibility reform, which health care was governed by the medical 

needs—or, rather arbitrarily budget-driven classification. 

With regard to the transitional pharmacy benefit, public law 108-

199, the omnibus appropriations bill from last year, provided Secretary Principi the authority to dispense prescription drugs from 

VHA facilities to enrolled veterans with prescriptions from private 

physicians. 

Included in that public law, and further explained in the conference report that accompanied it, report 108-141, was a requirement that the VA would incur no additional cost in providing such 

a benefit. I say that again, that the VA would incur no additional 

cost in providing such a benefit. 

PVA has expressed concern in the past with proposals similar to 

the transitional pharmacy benefit. The House report required the 

VA to collect and independently verify data on the costs and benefits of this new drug benefit, and submit a report to the committees 

on appropriations by March 2, 2004. 

It was interesting to see some of the statistics that were mentioned in the Secretary’s—or in the Under Secretary’s testimony 

earlier, but I don’t take that to be the report that’s outlined in this 

omnibus bill. We look forward to seeing what—any details that 

may come out of that, and we’re kind of interested to know if that 

actually has been put together yet, given that the date was set for 

March 2nd for that report to be provided. 

PVA believes that allowing the VA to fill prescriptions written by 

private physicians will further exacerbate an already dangerous 

funding problem. I must emphasize that without adequate funding, 

to meet increased demand for prescription drugs created by such 

a program the VA will be forced to obtain funding through other 

means. The funding may be drawn from an already wholly inadequate health care budget that Mr. Weidman explained in detail, 

or it could come from increased costs to veterans, as I have already 

mentioned. 

We appreciate the opportunity to testify today on this issue, and 

Mr. Chairman, I would be happy to answer any questions that you 

might have. 

[The prepared statement of Mr. Blake appears on p. 82.] 
33

Mr. SIMMONS. I thank you for your testimony, and I believe Ms. 

Sullivan is available here. And if she could perhaps provide that 

information to us, the public law 108-199 report, that would be appreciated. Thank you. Who is next? 

STATEMENT OF JOY J. ILEM 

Ms. ILEM. Okay. Mr. Chairman, Ranking Member Rodriguez, 

thank you for the opportunity to present the views of the Disabled 

American Veterans on a prescription-only health care benefit. 

The DAV has testified previously on several measures introduced 

in both the House and Senate that would authorize VA to fill prescriptions for veterans ordered by non-VA physicians. In general, 

we are opposed to this concept, and have expressed concern about 

the VA taking on the role of a pharmacy. 

Specifically, we are concerned that the impact of such a benefit 

will cause a major shift in reliance on the VA health care system 

for other than a full continuum of care and utilization of the comprehensive health care benefit package, therefore, possibly jeopardizing the viability of the entire system. 

However, we recognize that VA is struggling to provide timely 

health care to all veterans seeking care, and we appreciate the subcommittee providing this forum to further debate this issue and to 

re-examine the potential impact of introducing a prescription-only 

benefit option to certain veterans. 

It has been reported that increasing numbers of veterans age 65 

and older are turning to VA for low-cost prescription drugs. While 

we agree that in some cases a prescription-only benefit may eliminate the duplication of tests and procedures already conducted by 

a veteran’s private physician, it would make available VA resources 

utilized in the current process. It is not clear whether this type of 

initiative would be wholly beneficial to the VA health care system 

or veterans themselves. 

At the March 19, 2003 hearing on this issue, VA expressed concern that if an add-on pharmacy benefit was initiated without additional funding, it could erode the comprehensive medical care benefits that users of this system now enjoy. 

VA expressed reservations about implementing such a program 

because of the potential for significantly increased demand, projected increases in current pharmacy workload, and the potential 

impact that a prescription-only benefit could have in its in-house 

and consolidated mail-out patient pharmacies. We believe the VA’s 

concerns are valid and merit further consideration. 

There is also the question of appropriate quality assurance if prescription-only benefit were instituted. Currently, VA prides itself 

on being a comprehensive health care provider offering coordinated 

interaction between VA clinicians and pharmacists to ensure veterans receive the highest quality health care possible. 

VA has stated that the proper and effective use of medications 

by patients is the cornerstone of modern health care, and that drug 

therapy should be monitored, coordinated, and managed by a single 

primary care provider to ensure good patient care and avoid medication errors. 

We do not believe there has been a sufficient study of the potential impact of implementing a prescription-only benefit on the VA 
34

health care system, or on the quality of care veterans would receive 

with a limited pharmacy benefit. 

Although VA’s office of inspector general offered a potential savings for such a benefit, a potential cost analysis should be considered as well. importantly, the quality of care received by America’s 

veterans should be the focus of assessing VA’s pharmacy benefits. 

Currently, we face challenges. Specifically, finding a comprehensive long-term solution to sufficient VA health care funding, maintaining access to timely, high-quality health care services, keeping 

open enrollment for all veterans who need VA services, and most 

importantly, protecting VA’s specialized programs for veterans with 

spinal cord injury, blindness, amputations, and mental illness. 

Therefore, we cannot afford to be short-sighted or satisfied with 

temporary solutions to resolve VA’s backlog for care. Band-Aid approaches may help with few veterans in the short-term, but could 

ultimately short-change millions of veterans in the long run. The 

men and women serving in our armed forces today will need the 

VA for decades to come. We must ensure a stable and viable health 

care system for veterans now and in the future, and work together 

to develop long-term solutions to these complex problems. 

Mr. Chairman, that concludes my statement, and I will happy to 

answer any questions this subcommittee may have. 

[The prepared statement of Ms. Ilem appears on p. 89.] 

Mr. SIMMONS. Thank you very much. And now, through the process of elimination, Mr. Jones? 

STATEMENT OF RICHARD JONES 

Mr. JONES. Thank you. Chairman Simmons, Ranking Member 

Rodriguez, on behalf of AMVETS’ national commander John Sisler, 

and the nationwide membership of AMVETS, I am pleased to offer 

some comments on providing certain veterans with a prescriptiononly health care benefit. 

Regarding prescription drugs, the current general policy makes 

veterans eligible to receive VA prescription medications only if a 

VA physician has prescribed the medication to today’s certain limitations and certain exceptions. 

According to the inspector general of the Department of Veterans 

Affairs, the VA pharmacy benefit is the primary reason that veterans without service-connected disabilities use VA health care 

services. The inspector general says that nearly 90 percent of these 

veterans have access to private health care and private physicians, 

yet they wait in lengthy lines at the VA in order to be re-examined 

and re-tested. This causes veterans with a prescription already in 

hand to wait weeks, even months, before it’s filled, and creates a 

backlog of veterans waiting for doctors appointments. 

It is little wonder priority eight veterans have availed themselves 

of this benefit after Congress allowed them access to the VA system. After all, figures from the National Association of Chain Drug 

Stores claimed that for 2001, VA’s cost per prescription was almost 

half the cost found in the private sector. 

Mr. Chairman, AMVETS is generally supportive of extending 

and enhancing the VA policy on prescriptions. For example, we 

would like to see all enrolled veterans allowed to renew their pre-
35

scriptions, as well as receive the first issuance of a non-VA-prescribed medication. 

AMVETS would also support legislation that openly allows VA to 

fill a prescription for a veteran who has been diagnosed and prescribed medication by a non-VA physician. Many eligible veterans 

could see a substantial reduction in their medication expenses. 

They would also witness, in part, a promise of care fulfilled. 

In addition, a benefit of this type would likely induce some priority eight veterans enrolled before the Secretary’s cut-off date to 

return to their non-VA health care providers, and thereby reduce 

VA patient backlogs. 

And in the past, we have voiced concerns about the potential for 

VA becoming a national drugstore, rather than a provider of care. 

We have said that we would not like to see further diminishment 

of veterans’ access to care, because medical care dollars would be 

spent for prescriptions instead of primary or critical care of veterans. 

However, with the understanding that VA has rolled over more 

than $600 million unused fiscal year 2003 medical care dollars into 

fiscal year 2004, and projects increasing this amount to $800 million in fiscal year 2005, we no longer see the lack of available funding as a rationale for a barrier to veterans access prescription 

drugs. The money is there. 

Indeed, in this understanding, AMVETS is doubly disappointed 

in the ban on priority eight veterans. We know that VA has instituted a 30-day appointment policy that allows veterans to be seen 

by doctors outside the VA system if they can’t be scheduled within 

the time limit. Taking into account that the average cost of providing care to a priority eight veteran is $2,500 a year, there is 

ample funding available to give medical care to those veterans who 

earned and deserved it this year. 

We recognize that the budget appropriations process for this year 

has only just begun. But the course set by the House last week 

raises concern. The approved budget may appear ample when 

viewed with green eyeshades to those who view them that way. But 

to the clear eye of those who served in the armed forces and many 

other Americans, this is a growing question about decision-making 

and national priorities. 

Mr. Chairman, in closing, AMVETS thanks you for advancing the 

dialogue on the prescription drug needs of our nation’s veterans. 

We look forward to working with you and others in Congress to resolve this matter. 

As we find ourselves in times that threaten our very freedom, 

our nation must never forget those who ensure that our freedom 

endures. AMVETS thanks the panel for the opportunity to address 

this matter. 

[The prepared statement of Mr. Jones appears on p. 93.] 

Mr. SIMMONS. Very good statements, and I appreciate it very 

much. I appreciate very much the fact that we’re all aware that 

last week there was some hurly-burly on the floor, and yet I’m so 

gratified, I guess I could say, that throughout the course of this 

morning we focused very clearly and intently on this issue, and 

there was no retrospective rhetoric, let’s put it that way. And that 
36

shows what a fine subcommittee we have here, made up of some 

very fine people. 

I also personally wish to thank the representatives of the various 

veteran service organizations for their work, because it’s got to be 

frustrating when we get through a week like last week, and you 

shake your head and you wonder what happened. But I commit to 

you that it ain’t over until it’s over, and it ain’t over yet. 

So, that being said, I have a couple of questions for the panel as 

a group, and perhaps I will start with a comment. You understand 

that we are not testifying on a specific bill today, but we are, if you 

will, examining a concept. And as I would frame the concept from 

the testimony of the first panel, the concept is that somehow we 

must be able to provide access to those veterans, priority sevens 

and eights primarily, who want access to a pharmacy benefit without the long delays, and without the cost of those delays, which is 

$1 billion, by the VA’s own examination. And that’s a substantial 

cost. 

They appear to be more or less pleased with their private provider, they don’t want to turn the VA into a drugstore, but as veterans they want to access that benefit. 

And so, the question I posed to myself is is there a simply costneutral way to accomplish that task? Cost neutral, which means 

there may be a co-payment for them which is higher than what the 

average veteran is accustomed to, and yet would provide this priority eight or seven, who is currently out of the system, with access 

that would create savings. Is that not possible? 

And I guess our actuaries can examine and see whether that’s 

not the case. I think it would be possible. The VA has testified that 

they have encountered certain burdens and certain costs in implementing their temporary benefit, but by and large it seems to have 

been successful in meeting its limited goals. 

The survey shows that they’re up to 3,000,000 people out there 

who might be interested in this, which is a substantial number. 

And speaking simply for myself, I have—I received a draft notice, 

I put in my time in Vietnam, I actually had 31⁄2 years total service 

in that country on active duty and, in fact, in the Reserves. I did 

Reserve duty in Vietnam in Saigon, when I was assigned with the 

Central Intelligence Agency. So I did Reserve duty for 2 week in 

a war zone. 

I retired last year with 37 years, 7 months, and 24 days of active 

in Reserve service. But because I am a priority eight, I cannot access the VA for my medical health care or for my pharmacy benefits. Now, that’s because I didn’t take advantage of the VA at a 

time when it was open to all priorities, but it’s closed now. 

And I guess the point that I’m trying to make with my own personal story is that it seems to me that priority eights who are seeking a pharmacy benefit should somehow be able to access that, particularly if it’s cost neutral. Particularly if it’s cost neutral and in 

fact, if it could be structured in such a way to capture some of the 

savings that are available there. 

We all know that there is a struggle for resources. We all know 

that the funding is inadequate, or approaches adequacy. We all 

know that. We have been at this for a while. But we also know that 
37

there are certain realities that we face in trying to capture those 

funds that are ugly realities. 

And so, what I am trying to explore in this context is a way to 

accomplish a task in a way that’s not going to add to the financial 

burden, but will add to the benefits of our comrades in arms, especially in this way. 

The last thing I would be interested in doing is degrading the 

full benefits that our veterans receive, and degrading the capacity 

of the VA to meet its goals and objectives. But nonetheless, I felt 

that the issue of pharmacy is so important. 

And just to conclude, veterans in Alaska have a pharmacy benefit, because the distances are so great, the facilities are so limited, 

that there is a full-service prescription drug benefit offered by the 

VA to veterans from Alaska. And I daresay certain other geographic areas of the United States could really benefit from that 

program, and that we have an obligation to explore that and not 

to let past history get in the way of where we are today and where 

we are going. 

And for those who suggest that we don’t want to degrade Veterans’ Administration health care, I would argue that for many veterans, access to prescription drugs is that aspect of the health care 

that they really want and need, that they may not be seeking hospitalization or prosthetics, or certain other types of care and treatment, that in fact, with the modern model of health care delivery, 

prescription drugs are very much part of the health care. 

But I see the red light, and I will cease and desist. I never got 

my question in, and I apologize. Mr. Rodriguez? 

Mr. RODRIGUEZ. Thank you. Let me thank all of you for being 

here with us, and let me just say that what I gather, you know, 

is you’re also saying that our budgets, have basically determined 

what we have provided. So your concern seems to be that if we 

move in this direction, that it will funnel away a lot of the resources that are being presently used for other things. 

Now, if we begin to fund VA based on mandatory funding, I 

would presume that there would be an opportunity there to do the 

right thing and add resources based on where the needs are. Because of our current funding we are not sure that the money is 

automatically there and allocated based on the veteran. 

Then I would presume that some of you would be supportive of 

a prescription benefit, in some formula basis, based on our veterans 

out there, We would be able to look, for example, to west Texas, 

where they might not have any access and give them at least something. And I know that you know the VA has a real gap in service 

that exists out there. We don’t have that coverage uniformly across 

this country. 

And somehow, we have got to keep working on that, see how we 

can do that, and distribute that money automatically so that we 

can—if we have 100 veterans come into a location, then we fund 

you for 100 veterans coming to that location for specific services. 

Let me ask you—and I apologize, because I don’t know—H.R. 

1309 allows Medicare to reimburse VA. I wanted to get your perspective on that, and any other comments you want to make. Also, 

based on the need, tell me if you might be supportive of a program 

that would be uniformly supportive of a program that would pro-
38

vide the access to prescription drug coverage. And I guess we could 

start on either side. 

Mr. JONES. Mr. Rodriguez, AMVETS has written a letter to Representative Lane Evans supporting the goal of H.R. 1309, saying 

that we may have some concerns about certain specifics. 

I think the legislation would include all veterans, priority one 

through priority eight. That would mean that some priority one 

veterans might forego their comprehensive care to obtain the pharmacy benefit. There may be some need to tickle that part a little 

bit. But we have supported the goal of H.R. 1309, and we think 

that bill presents a nice adjustment and something that might well 

work. 

We would like to—these people do pay Medicare dollars through 

their working lives following their military service, and this would 

be a good way to ensure that they get the benefits they paid for. 

Mr. GAYTAN. The American Legion does support allowing Medicare-eligible veterans to receive health care through the VA. That 

entails pharmacy benefits, as well. The American Legion supports 

that. 

I do want to go back to discuss a little bit about what the chairman mentioned earlier, about the fact that we know that priority 

group eight veterans have been shut out of the system. We know 

that VA is funded at an inadequate level, and that we’re discussing 

or debating or considering a benefit that would be cost-neutral. 

The American Legion doesn’t feel that veterans have ever been 

asked to do anything cost-neutral. I’m sure you don’t think your 37 

years were cost-neutral. The American Legion doesn’t feel that veterans should be one category of Americans that has to look at a 

benefit, an earned benefit, only if it doesn’t cost the government 

anything. 

The American Legion supports repealing the suspension of enrollment for priority group eights, allowing those priority group 

eights to go back to the VA. The American Legion supports mandatory funding that will provide a budget that will prevent us from 

sitting in this room today and discussing other options, other ways 

that we can get veterans out of a line that exists due to an inadequate budget. 

The backlog that we have talked about all morning here is due 

to the fact that funding levels are too low. And when those facility 

directors of VA’s hospitals actually receive their budget, it’s 4 

months late. They can’t anticipate the need for full-time employees, 

they can’t anticipate the needed resources. So, therefore, the backlog exists. 

If they are waiting in line, if a veteran is waiting in line to receive pharmacy benefits, or if he or she is waiting in line to receive 

health care, the American Legion opposes that. 

What the American Legion sees as a solution to all these problems, to prevent the debate on cost-neutral benefits that are earned 

by America’s veterans, a quality budget needs to be provided and 

in a timely manner, so that the directors of these facilities are able 

to meet the needs of America’s veterans. And the American Legion 

supports mandatory funding to address that problem. 
39

Ms. ILEM. I would just respond also that we did a letter regarding that bill, and we did have some specific concerns about the bill 

but, you know, appreciated the overall intent. 

However, I also would like to just mirror comments of Mr. 

Gaytan and my other colleagues, you know, that we believe there 

is an overall larger issue here, and we would like to have a hearing 

and further debate on that issue, as well, and the issue of mandatory funding. 

We have been seeing lots of bills over the past year with regard 

to access issues, with regard to benefits, you know, these certain 

pharmacy benefits and all of these other things. And you know, 

when we boil those down, we keep coming back to the same issue. 

And we want to—I think everybody has the same goal in mind, 

you know, we want to see what’s right for veterans, what’s best for 

the system to ensure its viability in the future for our veterans 

that are coming back today that, you know, are going to be needing 

that system, you know, for decades to come. So that has to be, you 

know, the priority. So we hope that you will consider that. Even 

though it’s a controversial issue, we hope that you will. Thank you. 

Mr. SIMMONS. I’m happy to extend my colleague all the time that 

he needs to have his questions answered. 

Mr. BLAKE. Thank you very much, Mr. Chairman. I don’t think 

I could really say anything any better than what Mr. Gaytan said, 

as far as the solution to the overarching problem we have here. 

But in response to your question specifically about that bill, last 

year we did testify generally in support of the measure. We do have 

still some concerns that we have had all along with regards to any 

of these prescription drug legislative proposals, first and foremost 

being a possible fundamental change of admission of the VA. 

We have to remember that the reason for the VA is to provide 

health care to the nation’s sick and disabled veterans, and then 

every other thing that the VA does is in support of that mission. 

So we have to be careful not to erode that mission in providing a 

benefit. 

We also have to be—also, as a secondary concern, we don’t want 

to have a benefit where veterans may have to forego some part of 

their continuum of care just to receive a benefit. 

A veteran should be able to receive all of their care. And as a 

part of that, prescription drugs are one of those benefits. But they 

shouldn’t have to opt out of one to receive another. That’s another 

major concern that we have had. But we were generally in support 

of Mr. Evans’ bill last year. 

Mr. WEIDMAN. VVA also has reservations about H.R. 1309, but 

has consistently been in favor of Medicare subvention at the VA. 

The—I want to associate VVA with the remarks made by my distinguished young colleague, Mr. Gaytan, as well as comments made 

by my other distinguished colleagues here at the table. 

In regard to doing something about the funding base, we all are 

in agreement with that. That’s number one. But from VVA’s point 

of view, there are three things—three legs on this stool, otherwise 

this stool falls down. 

One is we need the dough to make it go in a consistent fashion 

so people can plan, and therefore, use -- get bigger bank for the 
40

buck, because they know how much they’re going to have. That’s 

number one. 

Number two is that we need to make this truly a veterans’

health care system. And everything that we do in terms of stopgaps, we believe, should be seen through that prism of does it detract from that fundamental core mission of assisting American 

veterans with their veteraness, if you will, that is, related to their 

military service. 

And third, but by no means least, is significant action by the 

committee and by other committees in this Congress to increase accountability, not just on departments and not just on areas within 

departments, but on individual senior managers, and hold them accountable. 

VA is—and particularly VHA—is notorious for never holding any 

senior managers truly accountable. The Kansas City hospital director that people say, ‘‘Well, he was fired.’’ He wasn’t fired. He retired with full benefits and a bonus and an award from VA and a 

retirement party paid for by VA. This is—I mean, throw us into 

that briar patch, any of us here at that table—is drawing a pension 

greater than most of us in this room earn. 

So, it’s—the question of accountability all has to enter into that, 

making it a VA health care system, and then making sure that we 

have adequate resources. 

I do want to just offer one parenthetic, if I may, about the $1 billion that the IG says we could save by sending people straight to 

the pharmacy benefit. We would urge the chair and the ranking 

member and your distinguished colleagues to beware of reports 

bearing good news on financial savings. 

[Laughter.] 

Mr. WEIDMAN. The GAO report about saving $1 million a day 

drove this care system. It was bogus from the start, most of us 

knew it, and if, in fact, there was wastage in trying to heat buildings that were antiquated and dilapidated, why was that? Why was 

that? Because VA and the folks here on the Hill had not done proper stewardship for some time. 

And turning around and selling some of those properties, as is 

now being discussed, is akin to selling your seed corn—and this is 

something you never do. You don’t sell a seed corn, because then 

you don’t have a crop the next year. Stewardship means the land 

does not belong to you. Stewardship means that the VA health care 

system does not belong to any of us here, it belongs to the American people, and to those veterans who will come after us so that 

that IG report we would look at very, very skeptically, and would 

urge you also to examine that Trojan horse very carefully as well, 

gentlemen. Thank you very much, sir. 

Mr. SIMMONS. Thank you. I will just make a brief comment on 

the issue of cost-neutral. The way I see it is not -- the way I see 

it is cost-neutral to the VA, not to the veteran. And I guess I’m focusing on Mr. F that Dr. Hong was testifying about. 

Mr. F is paying $642 a month for the same prescriptions that 

Mr. M is getting for $42 a month. That’s a fundamental inequity. 

And what I’m trying to figure out is how I can get Mr. F to get 

his monthly cost down to at least $154.95, which, theoretically, 
41

does not create a substantial burden for VA, but provides a substantial benefit for Mr. F, who is currently shut out. 

Now, in a perfect world, I would want everybody in the system, 

and I would want them to get all the bells and whistles, the full 

enchilada. That’s what I would like. But I don’t live in a perfect 

world, and neither do you. Neither do any of us, as much as we 

would like to. 

So the question I have in my mind is when we’re looking at 

Medicare subvention, which I support, but I see the forces arrayed 

against it—we all know that, it’s no surprise, we’ve tried, we know 

that they’re out there—when we know that the dollars are inadequate—I know that as well as you do, but I’m not sure how much 

I can change that—then I look to see what part of the system I can 

tweak to get a few more people in the door to get a benefit that 

I think they have earned and a savings that, to them, will be substantial. 

So, again, I think that we all have the same goal, we’re perhaps 

trying to achieve it in different ways. And that really is the purpose of this hearing here today. 

I will conclude by saying that years ago at Fort Devens, Massachusetts, which is now a prison and a community—talk about being 

a good steward of your resources, what a disgrace that is—but anyway, years ago at Fort Devens, Massachusetts, I met a retired colonel called Millett, Colonel Millett. I don’t know whether anybody 

remembers that name, but he was a Korean War veteran who won 

the Medal of Honor. And he won the medal of honor as a young 

officer when he and his unit were surrounded. And they ran out 

of ammunition. 

Now, of course, we always want our troops to have ammunition. 

I mean, we always want our veterans to have resources. But they 

ran out of ammunition. And the question was, ‘‘What do we do 

now?’’ Well, Colonel Millett—then Lieutenant Millett—said, ‘‘Fix 

bayonets.’’ And they fixed bayonets, and they charged out of their 

position, and they broke out and lived to fight another day. 

And in the process, a unit commander on another hillside, on observing this, wrote him up for the Medal of Honor, which he received. But there are times in all of this when we run out of ammunition, and so we have to fix bayonets. And I guess that’s what this 

hearing is all about. Thank you all very much. The hearing is adjourned. 

[Whereupon, at 12:45 p.m., the subcommittee was adjourned.] 

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56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99

WRITTEN COMMITTEE QUESTIONS AND THEIR RESPONSES
100
101
102

Æ