VA Drug Formulary: Drug Review Process Is Standardized at the National Level, but Actions Are Needed to Ensure Timely Adjudication of Nonformulary Drug Requests
Published: 2010-08-31T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In 2009, the Department of Veterans Affairs (VA) spent nearly $4 billion on prescriptions for veterans. In general, VA provides drugs on its national formulary. However, all VA medical centers must have a nonformulary drug request process that is overseen by their regional Veterans Integrated Service Network (VISN). This report responds to a House Committee on Appropriations report directing GAO to review VA's formulary process and to an additional congressional request. Specifically, GAO reviewed (1) the process VA uses to review drugs for its national formulary, (2) the approaches VISNs and medical centers take to implementing the nonformulary drug request process, (3) the extent to which VA ensures the timely adjudication of nonformulary drug requests, and (4) the mechanisms VA has in place to obtain beneficiary input on the national formulary and make the drug review process transparent. GAO reviewed VA policy guidance and VA's pharmacy-related information technology (IT) initiatives, analyzed 2008 and 2009 drug review data and 2009 nonformulary drug request data, and interviewed VA officials from the national level, each VISN, and a judgmental sample of four medical centers.
section_title: What GAO Found
paragraphs: VA uses a standardized process to review drugs for its national formulary that is coordinated at the national level by its Pharmacy Benefits Management Services (PBM). The Chief Consultant from VA's PBM told us that most drug reviews are initiated in response to FDA's approval of drugs for use on the market. To begin the process of deciding whether to include a drug on the national formulary, PBM develops evidence-based drug monographs that include information on safety, efficacy, and cost. PBM seeks comments on these monographs from VISN and medical center staff and, when appropriate, subject-matter experts. Once a monograph is complete, PBM sends it to its Medical Advisory Panel and the VISN Pharmacist Executive Committee, which review the monograph and vote on whether to add the drug to the national formulary. According to information provided by PBM, reviews for a majority of the drugs VA considered for addition to the national formulary in 2008 and 2009 were completed within a year of FDA approval, but there were a number of factors, such as safety concerns, that caused some to take longer. VISNs and medical centers vary in how they implement the nonformulary drug request process, including how they adjudicate nonformulary drug requests, collect and report required data to VA's PBM, and address appeals of denied requests. GAO found that IT enhancements could help facilitate more consistent implementation of the process. Although VA is working on replacing its pharmacy IT system, officials could not tell GAO whether components that would support the nonformulary drug request process will be implemented. VA requires that nonformulary drug requests be adjudicated within 96 hours, but it is unable to determine the total number of adjudications that exceed this standard due to limitations in the way data are collected, reported, and analyzed. While the total number of nonformulary drug request adjudications that exceed 96 hours is unknown, GAO found that data reported to VA's PBM on quarterly average adjudication times for medical centers are sufficient to demonstrate that not all requests are adjudicated within this time frame. Additionally, PBM does not have the framework in place to ensure that appeals of denied nonformulary drug requests are resolved in a timely fashion. VA obtains input from beneficiaries on the national formulary mainly through Veterans Service Organization meetings and complaints, though some VISNs have taken additional steps to seek this input. Officials from VA's PBM told GAO that they make the drug review process transparent to veterans through national formulary information available on PBM's Web site, and some VISN and medical center officials described undertaking other activities to educate beneficiaries. At the national level, VA officials are considering options for increasing beneficiary input on the national formulary and improving the transparency of the drug review process, and most VISN and medical center officials told us there could be benefit to doing so.
section_title: What GAO Recommends
paragraphs: GAO recommends that VA establish additional mechanisms to ensure nonformulary drug requests are adjudicated in a timely fashion. VA concurred with this recommendation.

section_title: Letter
paragraphs: In 2009, the Department of Veterans Affairs (VA) spent nearly $4 billion on  the 249 million prescriptions it dispensed to veterans, representing about   9 percent of VA’s total health care budget. In general, medications  provided through the VA pharmacy benefit must be prescribed by a VA  provider, filled through a VA pharmacy, and listed on the Veterans Affairs  National Formulary. The national formulary is a list of drugs, grouped by  class, that VA providers are expected to use when prescribing drugs for  veterans. Providers can request access to medications not listed on the  national formulary when it is clinically necessary to do so, and all VA  medical centers are required to have a nonformulary drug request  process. Most drugs, whether on the national formulary or nonformulary,  are ordered electronically through the Veterans Health Information  Systems and Technology Architecture (VistA)—VA’s health information  technology (IT) system. In 2009, 94 percent of drugs dispensed by VA  were national formulary drugs.
Until recently, drugs not listed on the national formulary might have been  available through formularies established at each of VA’s 21 regional  Veterans Integrated Service Networks (VISN); however, effective January  2009, VA eliminated the use of VISN formularies, making the national  formulary the only drug formulary used by VA. VA’s Pharmacy Benefits  Management Services (PBM) is the office within the Veterans Health  Administration (VHA) responsible for administering VA’s pharmacy  benefit on a nationwide basis. VA’s PBM works in conjunction with the  Medical Advisory Panel (MAP) and the VISN Pharmacist Executive (VPE)  Committee to manage the national formulary, and also provides guidance  for VISNs and medical centers which are responsible for implementing the  nonformulary drug request process.
Members of Congress and interested stakeholders had questions about  whether VA’s policies and practices for managing the national formulary  and processing nonformulary drug requests provide veterans with timely  access to needed medications. Additionally, they had questions about the  extent to which beneficiaries can provide input on the national formulary  and if VA’s process for reviewing drugs for its national formulary is  sufficiently transparent. We conducted this work in response to a House  Committee on Appropriations report associated with H.R. 3082, the 2010  Military Construction, Veterans Affairs, and Related Agencies  Appropriations Bill, which directed us to review and report on VA’s  formulary process, and in response to a similar request from the  Chairman, Subcommittee on Health, House Committee on Veterans  Affairs. In this report, we (1) describe the process VA uses to review  drugs for its national formulary, (2) describe the approaches VISNs and  medical centers take to implementing the nonformulary drug request  process, (3) examine the extent to which VA ensures the timely  adjudication of nonformulary drug requests, and (4) describe the  mechanisms VA has in place to obtain beneficiary input on the national  formulary and make its drug review process transparent to them.
To describe the process VA uses to review drugs for its national formulary,  we reviewed VA policy guidance, such as VA’s formulary management  handbook. We obtained and summarized information provided by VA’s  PBM on drug reviews VA conducted in 2008 and 2009 and identified (1) the  number of reviews conducted, (2) the outcomes of these reviews, and   (3) drug review completion times. We determined drug review completion  times by calculating the amount of time elapsed from the date PBM  reported a drug as approved by the Food and Drug Administration (FDA)  to the date it reported VA completing its review of the drug. We also  obtained information from PBM on the number of new drugs approved by  FDA in 2008 and 2009 and whether VA had completed reviews of these  drugs as of March 2010. Additionally, we interviewed officials from VA at  the national, regional, and local levels. Specifically, we interviewed  national-level officials from PBM, including the Chief Consultant, and  VPEs from the 21 regional VISNs. To interview officials at the local level,  we identified a judgmental sample of four medical centers. We selected the  four medical centers to achieve variation in the percentage of  nonformulary drug prescriptions dispensed between 2006 and 2009 and  variation in the total number of prescriptions dispensed —both national  formulary and nonformulary—during 2009. We also considered  geographic location. From each medical center, we interviewed the chief  of pharmacy and the physician pharmacy and therapeutics (P&T)  committee chair. Finally, we observed a MAP meeting and interviewed  some of the members.
To describe the approaches VISNs and medical centers take to  implementing the nonformulary drug request process, we reviewed VA’s  formulary management handbook and interviewed officials from VA’s  PBM, the 21 VPEs, and officials from our sample of four medical centers.  Additionally, we obtained documentation from VA on its pharmacy-related  health IT initiatives and interviewed officials from PBM and VA’s Office of  Information and Technology (OI&T) who are responsible for designing  and implementing these initiatives. We also reviewed our past and ongoing  work on VA health IT initiatives.
To examine the extent to which VA ensures the timely adjudication of  nonformulary drug requests, we reviewed VA’s formulary management  handbook for policies to use as criteria, and determined that VA requires  nonformulary drug requests to be adjudicated within 96 hours. We  interviewed officials from VA’s PBM, the 21 VPEs, and officials from our  sample of four medical centers. We also obtained and analyzed quarterly  nonformulary drug request data on the average time taken to adjudicate  requests reported to PBM for calendar year 2009 at the VISN and medical  center levels. We reviewed related documentation, interviewed  knowledgeable VA officials, conducted tests for missing data, outliers, and  obvious errors, and determined that data reported for 13 of the 21 VISNs  and their medical centers were reliable for our purposes.
To describe the mechanisms VA has in place to obtain beneficiary input on  the national formulary and make its drug review process transparent to  them, we reviewed VA’s formulary management handbook as well as  reviewed the Web site for VA’s PBM for the type of information available  to beneficiaries. In addition, we interviewed officials from PBM, the 21  VPEs, and officials from our sample of four medical centers as well as  observed discussions at the MAP meeting we attended. We also  interviewed officials from the Department of Defense (DOD) regarding its  Uniform Formulary Beneficiary Advisory Panel and attended a meeting of  this group.
We conducted this performance audit from November 2009 through  August 2010 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: Formularies are used to help control pharmacy costs, enhance patient  safety, and improve quality of care by, among other things, limiting drug  choices to those a health care organization has determined are the most  medically appropriate and cost-effective for a given patient population. As  early as 1955, VA medical centers began using formularies, and at the time,  each medical center maintained its own formulary at the local level. In  September 1995, VA created a centralized group to manage its pharmacy  benefit nationwide, now called PBM, and soon began the process of  moving to a single, national formulary. As an interim step, VA established  regional formularies operated by each VISN. On June 1, 1997, VA  implemented the national formulary to help standardize veterans’ access  to care across the country, though the medical centers and VISNs  continued to maintain their own local and regional formularies. In 2001,  VA abolished medical center formularies and in 2009, VA eliminated VISN  formularies.
Discussion of the elimination of the regional VISN formularies began in  2005. In 2006, VA reviewed all drugs on VISN formularies that were not on  the national formulary to determine if these drugs should be considered  for inclusion on the national formulary. According to officials from VA’s  PBM, in cases where VA decided not to add a drug from a VISN formulary  to the national formulary, VISN and medical center staff were given   6 months to appeal the decision. In the end, 91 drugs from VISN  formularies were added to the national formulary. Around the same time  that this review was taking place, VISNs were asked to stop adding new  drugs to their formularies, unless the drugs were also being added at the  national level.
While VISNs and medical centers no longer maintain their own  formularies, VA’s decentralized approach to developing VistA means that  each medical center is still responsible for maintaining a local drug file  that matches VA’s national drug file. In addition to maintaining a local  drug file, each medical center decides whether and how it will customize  other VistA applications onsite. VistA contains over a hundred separate  computer applications, including the Computerized Patient Record System  (CPRS). VA providers can use CPRS to review and update patient medical  records and to place electronic orders for medications, procedures, and  tests.
As part of its responsibilities for managing VA’s pharmacy benefit at the  national level, VA’s PBM updates the national formulary listing, maintains  databases that track drug use, and reviews data on nonformulary drug  requests that it requires each VISN to report quarterly. PBM clinicians are  responsible for maintaining a clinical portfolio on drugs for certain  diseases, and are expected to continuously review information on new  drugs that are relevant to their portfolio, as well as stay current on  information on existing drugs. When appropriate, these clinicians will  initiate a drug review. PBM works with MAP and the VPE Committee to  conduct reviews of drugs for its national formulary, including the review  of drugs approved by FDA for use on the market.
In addition to working with VA’s PBM on the national-level VPE  Committee, each VPE works in conjunction with its VISN formulary  committee at the regional level to provide oversight and guidance for  national formulary management activities for the medical centers within  the network. In turn, at the medical center level, each chief of pharmacy  works with the local P&T committee to implement national formulary  decisions and ensure compliance with these decisions. (See fig. 1.)
Although nearly all drugs that VA providers prescribe are on the national  formulary, in some cases, providers determine that it is clinically  necessary to prescribe nonformulary drugs. VA monitors the prescription  of nonformulary drugs to ensure appropriate use and accordingly, each VA  medical center must have a nonformulary drug request process. While  VISNs and medical centers are responsible for implementing the  nonformulary drug request process, VA has outlined certain requirements  within its formulary management handbook. The handbook states that, at  the local level, each VA medical center is responsible for establishing a  process to adjudicate nonformulary drug requests that ensures decisions  are evidence-based in accordance with certain prescribing criteria. VA  also requires that medical centers adjudicate nonformulary drug requests  within 96 hours. Each medical center chief of staff is responsible for  establishing a system to address any provider-initiated appeals of denied  nonformulary drug requests.
At the regional level, VISNs are responsible for ensuring that medical  centers have a nonformulary drug request process in place. Each VISN is  also responsible for establishing a process to analyze nonformulary drug  request data at the VISN and medical center levels to determine if the  process is implemented appropriately and effectively in medical centers,  and report these data to VA’s PBM on a quarterly basis. Reported  information must include the numbers of nonformulary drug requests  received, approved, and denied as well as the average time taken to  adjudicate completed requests.
In addition to requirements for the nonformulary drug request process, the  handbook requires that VISNs ensure that local forums exist where  formulary issues can be discussed with veterans service organizations  (VSOs) on an ongoing basis. While VSO meetings may also be held at the  regional and national level, there is no requirement that these meetings  organize specifically for the purposes of discussing formulary issues.
We previously reported on the national formulary in December 1999 and in  January 2001. We found that veterans had access to needed medications,  but VA needed to improve its oversight activities. In our 2001 report, we  recommended that VA take steps to better ensure that VISNs and medical  centers comply with the national formulary and nonformulary drug  request policies and procedures. VA responded to these recommendations  by, among other things, having its PBM check drug utilization data—which  tracks drugs dispensed across VA—for outliers and requiring that  nonformulary drug requests be adjudicated within 96 hours.
section_title: VA’s Process for Reviewing Drugs for Its National Formulary Is Standardized
paragraphs: VA uses a standardized process to review drugs for its national formulary  that is coordinated at the national level by its PBM. PBM’s Chief  Consultant told us that most reviews are initiated in response to FDA’s  approval of drugs for use on the market. To begin reviewing a drug for  inclusion on the national formulary, clinicians from PBM develop  evidence-based drug monographs that include information on safety,  efficacy, and cost, and seek comments on these monographs from VISN  and medical center staff. Completed monographs are then reviewed by  MAP and the VPE Committee, who vote on whether to add the drug to the  national formulary. A majority of the drugs VA considered for addition to  the national formulary in 2008 and 2009 were reviewed within one year of  FDA approval, but there were various factors that caused some reviews to  take longer.
subsections: section_title: VA’s PBM Initiates Most Drug Reviews in Response to FDA Approval of Drugs
paragraphs: VA’s drug review process is coordinated at the national level by its PBM,  whose Chief Consultant told us that most reviews are initiated following  FDA’s approval of a drug for use on the market to determine whether to  add the drug to the national formulary. While there are different types of  FDA approvals, PBM’s Chief Consultant said that most drug reviews are  triggered by FDA approval of a new drug. PBM also initiates drug reviews  to consider whether to remove a drug from the national formulary, such as  in response to the emergence of new safety issues. Additionally, PBM  officials said that they may decide to conduct a drug class review to  determine whether there is superiority of one or more drugs in a class, or  if the drugs are equivalent in terms of safety and efficacy. Such reviews are  undertaken when VA is considering negotiating a drug contract or to  determine a drug’s place in therapy relative to other drugs in its class.
According to VA officials, medical center staff can submit requests to their  local P&T committees to review a drug for addition to or removal from the  national formulary. P&T committees review and forward approved  requests to their regional VISN formulary committees. If VISN formulary  committees review and approve requests, they forward them to VA’s PBM  for consideration at the national level. In 2009, VISNs submitted 13  requests for drug reviews, and while 2 of the requests were later  withdrawn, PBM approved all of the requests for national review.
section_title: VA Uses Evidence-Based Drug Reviews and Relies on Internal Stakeholders to Select Drugs for Its National Formulary
paragraphs: VA uses a standardized process to review drugs for inclusion on its  national formulary, which begins with a clinician from its PBM researching  relevant literature to develop an evidence-based drug monograph. Each  drug monograph includes the clinician’s research methodology, safety and  efficacy tables, and data on cost. Further, the clinician may consult with  VA subject matter experts to assist with the development of monographs  when necessary. Once a draft of a monograph is ready, the clinician  forwards it to the VPEs and requests that the document be disseminated to  VISN and medical center staff, including physicians and pharmacists, for  comment. Generally, within a period of 2 to 4 weeks, comments about the  monograph are returned to the PBM clinician. The clinician compiles and  reviews these comments, and incorporates any changes deemed  appropriate to the monograph.
Once VA’s PBM has completed a drug monograph, MAP and the VPE  Committee review PBM’s findings and vote whether to add the drug to the  national formulary based on an assessment of the drug’s safety, efficacy,  and cost as well as its relevance to the veteran population. While most  members of MAP and the VPE Committee are VA staff, a clinical  representative from DOD participates in the MAP and VPE Committee  meetings and votes on MAP decisions. A number of MAP and VPE  Committee members we interviewed told us that they consider a drug’s  safety and efficacy before they consider cost when reviewing a  monograph. Most members also said that the two groups typically agree  on national formulary decisions, but that when disagreements occur, they  usually stem from operational issues, such as establishing process  guidelines for ordering a drug within VA. In the event of a disagreement,  VA’s policy is that final decisions rest with MAP.
MAP and the VPE Committee may also recommend that restrictions or  criteria for use be developed to better ensure a drug’s appropriate use.  Criteria for use are reviewed by MAP and the VPE Committee and then  sent to VISN and medical center staff for comment. Once comments are  received, members vote to approve the final document. Officials from VA’s  PBM told us that MAP and the VPE Committee are also authorized to  classify a drug as “no buy” for purposes of prohibiting its use in cases  where there are serious safety concerns in a population similar to the VA  population. However, as of April 2010, there were no drugs on the national  “no-buy” list. In addition, PBM has developed national guidance to  improve the safety of “off-label” prescribing, which occurs when providers  prescribe drugs for indications other than those FDA has approved. While  PBM authorizes its providers to prescribe drugs “off-label,” it recommends  that providers use an evidence-based approach and follow protocols  established by their local P&T committee. Figure 2 illustrates VA’s drug  review process.
After MAP and the VPE Committee make national formulary decisions,  VA’s PBM updates the national drug file. VISN formulary committees  communicate national formulary decisions to medical center P&T  committees. P&T committees subsequently inform medical center staff of  these decisions. Pharmacy IT staff at each medical center update the local  drug file by matching the local drug file to the drug’s code at the national  level. PBM officials we interviewed stated that it is more difficult for some  medical centers to update local drug files than others, generally due to IT  staffing resources.
In 2008 and 2009, VA considered 61 drugs for inclusion on the national  formulary. Of those, MAP and the VPE Committee voted to add 11 drugs to  the national formulary and to approve 50 drugs for nonformulary use. In  addition, MAP and the VPE Committee voted to add either restrictions or  criteria for use to 25 of these drugs to ensure they were used  appropriately. According to officials from VA’s PBM, MAP and the VPE  Committee made the 50 drugs nonformulary for reasons including (1) they  determined the drug under review offered no significant benefit over  national formulary alternatives already available, (2) they determined that  the drug would have limited use for the veteran population, or (3) they had  concerns about ensuring the drug’s safe and appropriate use, and  therefore required prospective review.
section_title: Drug Review Times Vary
paragraphs: The time it takes VA to review a drug varies and is primarily determined by  whether there are factors that complicate the drug review process, such as  safety concerns, and the drug’s priority status. Of the 61 drugs that VA  considered for addition to the national formulary during 2008 and 2009,  information provided by VA’s PBM indicates that 35 reviews were  concluded within one year of the time FDA approved the drug and an  additional 17 reviews were completed within 2 years of FDA approval. The  remaining 9 reviews were completed more than 2 years after the FDA  approval, with 4 of these reviews taking 3 to 5 years to complete. PBM  officials reported a number of reasons why some of these reviews took  longer than others. In some cases, safety concerns necessitated the  development of criteria for use, which delayed the drug review process.  For example, one drug, approved by FDA for the treatment of a rare blood  disease, was determined to potentially increase a patient’s risk of infection  and took VA 18 months to review. Officials said that developing criteria for  use increased review time because the criteria were complicated and  required consultation with a hematologist. In other cases, reviews were  delayed because there was a lack of reputable information, such as studies  published in peer-reviewed journals. Additionally, drug reviews took  longer when alternative drugs were already available on the national  formulary and PBM decided to conduct a drug class review. PBM officials  told us that drug class reviews can take twice as long as the review of an  individual drug because they involve compiling information on multiple  drugs.
Officials from VA’s PBM told us they experience a backlog of drugs to  review because there are always more potential reviews than they can  accommodate, and thus, they review high-priority drugs first.  Additionally, the officials said they have implemented strategies to  alleviate the drug review workload, such as soliciting assistance from  VISN and medical center staff to prepare and present drug monographs,  and conducting abbreviated drug reviews when appropriate. Some VPEs  we spoke with said that they can talk to PBM clinicians about moving a  drug up on the priority list if necessary.
In addition to the 61 drugs VA considered for addition to the national  formulary in 2008 and 2009, we examined new drugs approved by FDA in  2008 and 2009, and the progress VA made in reviewing them. (See table 1.)  According to information provided by VA’s PBM, of the 52 new drugs FDA  approved for use on the market in 2008 and 2009, VA either reviewed, or  was in the process of reviewing, 38 of them as of March 2010. Reviews of  the remaining 14 drugs were pending, since VA categorized these drugs as  a lower priority for reasons such as there being a viable alternative drug  on the national formulary or the drug having limited use for the veteran  population.
Although drug review times vary, if providers determine that it is clinically  necessary, veterans may be able to access a drug before a national review  is complete. Officials from VA’s PBM told us that, due to the length of time  it takes for PBM to conduct a drug review, VISNs and medical centers may  develop interim guidance for reviewing and approving nonformulary  requests for a drug not yet reviewed at the national level. The officials said  that the VISN or medical center creating interim guidance could develop  drug monographs and criteria for use for the purpose of evaluating  nonformulary drug requests. PBM officials also said that they neither  encouraged nor discouraged this practice, and think it is common among  VISNs and medical centers. Officials from one medical center we  interviewed told us that they conduct reviews of drugs that have not yet  been reviewed at the national level, and that if they approve a drug for  nonformulary use, they typically develop local restrictions or criteria for  use until national guidance is issued. Officials from another medical center  stated that they would not decide whether to permit nonformulary use of  drugs that have not been reviewed by MAP and the VPE Committee, but  noted that if a veteran urgently needed one of these medications, they  would forward the request to the VISN.
section_title: VISNS and Medical Centers Vary in Approaches to Implementing the Nonformulary Drug Request Process; Technology Enhancements Could Further Standardize the Process
paragraphs: VISNs and medical centers vary in approaches to implementing the  nonformulary drug request process, including how they adjudicate  nonformulary drug requests, collect and report required data to VA’s PBM,  and address appeals of denied requests. We found that IT enhancements  could help facilitate more consistent implementation of the process.  Although VA intends to replace its pharmacy IT system, it is uncertain  whether changes that would support the nonformulary drug request  process will be implemented.
subsections: section_title: Processes for Adjudicating Nonformulary Drug Requests, Collecting and Reporting Required Data, and Addressing Appeals Vary
paragraphs: The process for adjudicating nonformulary drug requests varies among  medical centers, in part due to differences in local IT resources. Most  medical centers use CPRS to electronically process nonformulary drug  requests, though providers can also make requests outside of the system  either through submitting paper-based requests or contacting adjudicating  officials directly to verbally request nonformulary drugs. Further, the  extent to which medical centers can automate CPRS depends on the  availability of onsite IT expertise. Some medical centers, for example, are  able to create drug-specific order templates in CPRS for nonformulary  drugs. Officials from VA’s PBM told us that these templates are interactive  and prompt providers through criteria checks to ensure appropriate use. If  criteria are met, the drug is automatically submitted for ordering. Although  this method further automates the nonformulary drug request process and  better ensures that information about the drug is easily accessible to  providers, some VPEs told us that it can be challenging from an IT  perspective and that not all medical centers have the IT resources needed  to create order templates. One VPE told us that the VISN has created order  templates so that medical centers with more limited IT resources can use  them, and another VPE said that the VISN would like to do this.
While some medical centers are able to create drug-specific order  templates, most VPEs and medical center officials whom we interviewed  told us that CPRS is used to create electronic nonformulary drug request  forms, which providers submit to a pharmacist for adjudication. The  format of these request forms can vary. For example, some may be used  just for nonformulary drug requests, while others may be used more  broadly to request both national formulary drugs that have restrictions and  nonformulary drugs. Additionally, some nonformulary drug request forms  may be populated with drug-specific information, while others require  providers to fill-in information for requested drugs. Officials from two of  the four medical centers whom we interviewed cited challenges with using  nonformulary drug request forms. For example, officials from one medical  center told us that due to the way the nonformulary drug request form is  designed, providers may not realize how to access information needed to  justify their requests and subsequently have them denied.
VISNs vary in the processes they use to collect required nonformulary  drug request data and report these data at the VISN and medical center  levels to VA’s PBM on a quarterly basis. VPEs from 18 of the 21 VISNs told  us they collect required data—which include the numbers of nonformulary  drug requests received, approved, and denied, as well as the average time  taken to adjudicate completed requests— from their medical centers and  report them to PBM, while 3 VPEs said that they instruct medical centers  to report nonformulary drug request data directly to PBM. VPEs from the  18 VISNs obtain nonformulary drug request data in a variety of ways, such  as extracting data from shared databases, or requiring medical center staff  to complete spreadsheets or input data into an internal VISN Web site.
Medical centers have established different processes for addressing  provider-initiated appeals of denied nonformulary drug requests, and one  VISN has centralized the appeals process. The VPEs we interviewed  stated that medical centers rely on different personnel to adjudicate  appeals of denied nonformulary drug requests, such as the chief of staff,  the chief of pharmacy, the P&T committee chair, or the entire P&T  committee. Furthermore, the appeals process may involve several layers  of review. For example, officials from one medical center explained that  appeals are first routed to a pharmacy supervisor. If the pharmacy  supervisor also denies the nonformulary drug request, it is forwarded to  the chief of medicine for review. If the chief of medicine denies the  request, the provider can make a final appeal to the chief of staff. Some  VPEs also said that VISN chief medical officers and formulary committees  may become involved in adjudicating appeals at the regional level.
section_title: Technology Enhancements That Could Further Standardize the Nonformulary Drug Request Process Have Been Considered, but Implementation Is Not Planned
paragraphs: Based on interviews with VA officials, we found that IT improvements  could facilitate more consistent implementation of the nonformulary drug  request process among VISNs and medical centers, and some of these  capabilities were included in the original scope of VA’s Pharmacy  Reengineering (PRE) project. Since 2001, VA has been working on PRE  with the intention of improving pharmacy operations, customer service,  and patient safety by replacing current pharmacy software with new  technology. At the national level, VA’s Office of Information and  Technology is responsible for planning, executing, and providing oversight  for PRE—which includes allocating resources to the project—while its  PBM is responsible for developing and prioritizing PRE requirements.  PBM officials told us that PRE was expected to make adjudicating  nonformulary drug requests and to make collecting and reporting related  data easier and more standard systemwide. For example, PBM’s Chief  Consultant said that with enhanced software, providers at all VA medical  centers would be prompted to complete a series of criteria checks when  requesting a nonformulary drug, and if met, the request would be  automatically approved. PBM officials also stated that PRE would help  improve data collection and reporting related to nonformulary drug  requests if it is implemented as intended. VPEs from 15 of the 21 VISNs  we spoke with stated that improvements could be made to VA’s pharmacy  IT system, and most cited various benefits that improvements could  provide, such as better ensuring that prescribing criteria are adhered to  and enhancing the ability to collect and report nonformulary drug request  data.
However, VA has recently restructured the PRE project and has not  established plans for delivering all originally proposed capabilities. In July  2009, the department suspended IT projects— including PRE—that had  either fallen behind schedule or gone over budget. Subsequently, the  department instituted a new IT project management approach that, among  other things, requires projects to plan and deliver releases of new IT  functions in increments of up to 6 months. In October 2009, VA restarted  PRE with plans for an initial set of four increments and has since  identified two additional increments, for a total of six increments.  According to officials from VA’s OI&T and PBM, the six increments reflect  an effort to meet the department’s highest priority pharmacy reengineering  needs while delivering new IT functions more frequently. However,  capabilities that directly support the nonformulary drug request process  and related data collection and reporting are not included in these  increments, and as of May 2010, future increments had not been planned.  Furthermore, VA’s development and implementation of future increments  could be impacted by delays the project is experiencing with the first six  increments. Specifically, while increment four was scheduled to be  implemented by June 2010, in August 2010 officials said that they intended  to implement this increment by the end of the month. Officials also told us  that increments five and six may not meet their estimated implementation  date of December 2010. As a result, the extent to which PRE will help  standardize the nonformulary drug request process, as the project was  originally envisioned, is uncertain.
section_title: VA’s Efforts to Ensure the Timely Adjudication of Nonformulary Drug Requests Have Limitations
paragraphs: Per VA policy, nonformulary drug requests must be adjudicated within 96  hours; however, VA is unable to determine the total number of  adjudications that exceed this standard due to limitations in the way data  are collected, reported, and analyzed. While the total number of  nonformulary drug request adjudications that exceed 96 hours is  unknown, we found that data reported to VA’s PBM on quarterly average  adjudication times for medical centers are sufficient to demonstrate that  not all requests are adjudicated within this time frame. Additionally, PBM  has limited oversight of the timeliness of appeals of denied nonformulary  drug requests.
subsections: section_title: VA Is Unable to Determine the Total Number of Nonformulary Drug Request Adjudications That Exceed Its 96-Hour Standard, but Reported Data Are Sufficient to Demonstrate That Not All Are Completed within This Time Frame
paragraphs: VA policy requires that nonformulary drug requests be adjudicated within  96 hours, but it is unable to determine the total number of adjudications  that exceed this standard due to limitations in the way data are collected,  reported, and analyzed. As previously noted, VISNs are required to report  nonformulary drug request average adjudication times at the VISN and  medical center levels to VA’s PBM on a quarterly basis. VA’s decision to  limit data collection and analysis of the timeliness of nonformulary drug  request adjudications to average adjudication times has oversight  implications compared to collecting and analyzing data on individual  requests. First, without collecting and analyzing request-level data, the  total number of adjudications that exceed 96 hours is unknown  systemwide. Second, averages can be strongly influenced by the presence  of a few extreme values, or outliers, and may not give an accurate view of  the typical adjudication times at medical centers.
Additionally, inconsistencies in the way nonformulary drug request data  are collected and reported across VA means that data reported for some  VISNs and their medical centers may not be entirely accurate or complete.  VPEs for 8 of the 21 VISNs told us that medical centers in their regions  may include requests for restricted national formulary drugs in the  nonformulary drug request data that they report to VA’s PBM. If quarterly  average adjudication times were to exceed 96 hours at medical centers  within these VISNs, it would not be possible to determine whether this  was the result of requests for restricted national formulary drugs or  requests for nonformulary drugs. PBM officials said that they were not  aware of this practice and would remind VPEs that only requests for  nonformulary drugs are to be reported. Also, VISNs and medical centers  determine how they will collect and report data on nonformulary drug  requests made through paper-based forms and direct verbal  communications with adjudicators, and some medical centers may not  include these types of requests in reported data. Specifically, officials  whom we interviewed from one medical center told us that only requests  for 26 nonformulary drugs are made through CPRS and reported to PBM,  while other nonformulary drug requests are made through direct  communications with adjudicators to manage workloads. The VPE for this  medical center said that steps are being taken to ensure that it includes all  nonformulary drug requests in the data it reports. Finally, six medical  centers did not report nonformulary drug request data for every quarter in  2009. PBM officials told us they were not aware of this issue and would  ensure that VPEs check that all medical centers report data.
While VA is unable to determine the total number of nonformulary drug  request adjudications that exceed 96 hours, we found that data reported to  VA’s PBM on quarterly average adjudication times for medical centers are  sufficient to demonstrate that not all requests are adjudicated within this  time frame. To conduct our review of the data reported to PBM, we  limited our analysis to the 13 VISNs and their medical centers where VPEs  told us that requests for restricted national formulary drugs are not  included in reported nonformulary drug request data. Therefore, even  though reported data for these VISNs and medical centers may be  incomplete due to, for example, missing paper-based and verbal requests,  the data are sufficiently reliable to show that at least some nonformulary  drug requests are not being adjudicated within VA’s 96-hour standard.  Specifically, we found that during 2009, 7 of these VISNs each had one or  more medical centers that took longer than 96 hours—on average—to  adjudicate nonformulary drug requests in a given quarter. Quarterly  average adjudication times that exceeded 96 hours within the 7 VISNs  ranged from just over 97 hours at one medical center to 240 hours at  another medical center.
Officials from VA’s PBM told us that they analyze nonformulary drug  request data aggregated at the VISN level to monitor the timeliness of  adjudications; however, this approach may not alert them to adjudication  problems occurring at medical centers. PBM officials stated that VISNs  and medical centers are primarily responsible for ensuring compliance  with nonformulary drug request policies; thus, while medical center-level  nonformulary drug request data are collected and reported to PBM, it  analyzes data aggregated at the VISN level to ensure timely adjudications  and expects VISNs and medical centers to monitor medical center-level  data. PBM officials told us that they would follow-up with VISNs if  aggregated data showed an average adjudication time that was greater  than 96 hours. However, while at least 7 VISNs had medical centers with  reported quarterly average adjudication over 96 hours in 2009, none of the  VISN-level averages exceeded VA’s standard.
section_title: VA’s PBM Has Limited Oversight of the Timeliness of Appeals of Denied Nonformulary Drug Requests
paragraphs: At the national level, VA’s PBM does not have the framework in place to  ensure that appeals of denied nonformulary drug requests are resolved in a  timely fashion. While PBM officials told us that they expect nonformulary  drug request appeals to be adjudicated in a timely manner, they have not  established a time frame in policy. Most VPEs also told us that they expect  appeals to be adjudicated in a timely manner, and some stated that the   96-hour nonformulary drug request adjudication threshold also applies to  appeals. However, we found that not all appeals processes may be  structured to produce timely results. For example, officials from one  medical center told us that the local P&T committee adjudicates appeals  for nonformulary drugs that are not urgently needed. However, one official  noted that appeals that go to the P&T committee can take a month or more  to resolve as they are dependent on the P&T committee’s meeting  schedule. Other VPEs also stated that the medical centers in their regions  may require P&T committees to adjudicate appeals.
Furthermore, VA’s PBM does not require VISNs and medical centers to  collect and analyze data on the nonformulary drug request appeals  process; therefore, the number of appeals, outcomes, and adjudication  times are unknown systemwide. Of the 21 VISNs, only one VPE reported  that the VISN collects and analyzes data on nonformulary drug request  appeals. Some VPEs told us that medical centers may track nonformulary  drug request appeals data. However, officials from three of the medical  centers whom we interviewed told us that their sites do not collect such  data, with an official from one noting that this is because the medical  center has yet to receive any appeals. An official from the fourth medical  center whom we interviewed said that appeals are published in P&T  committee meeting notes, but that the medical center does not aggregate  these data.
section_title: VA Has Some Mechanisms to Obtain Beneficiary Input on the National Formulary and Make Its Drug Review Process Transparent and Is Considering Additional Steps
paragraphs: VA obtains beneficiary input on the national formulary mainly through  VSO meetings and complaints, though some VISNs have taken additional  steps to seek this input. Officials from VA’s PBM told us that they make  the drug review process transparent to veterans through online  information about the national formulary, and some VPEs and medical  center officials described undertaking other activities to educate  beneficiaries. At the national level, VA officials are considering options for  increasing beneficiary input on the national formulary and improving the  transparency of the drug review process, and most VPEs and medical  center officials told us there could be benefit to doing so.
subsections: section_title: VA Obtains Beneficiary Input on the National Formulary Mainly through VSO Meetings and Complaints
paragraphs: VA officials told us that they may obtain beneficiary input on the national  formulary through VSO meetings; although the extent to which pharmacy  staff attend these meetings varies among VISNs and medical centers, and  officials said that national formulary issues are not frequently discussed.  All VPEs told us that medical centers in their regions hold local VSO  meetings, and many said that there are VSO meetings held at the regional  level as well. However, 3 of the 21 VPEs said that they or a VISN-level  pharmacy representative regularly attend VSO meetings either at the  regional or local level. Eleven VPEs said that they sometimes attend these  meetings, and 7 said that they do not attend, but noted that pharmacy staff  at medical centers may attend the meetings. Of the medical center chiefs  of pharmacy we interviewed, one attends VSO meetings at the medical  center regularly, two attend if invited, and one does not currently attend  these meetings.
While officials from most VISNs and medical centers whom we  interviewed told us that pharmacy benefits are discussed during VSO  meetings, many also said that issues related to the national formulary are  not often raised. Rather, they stated that pharmacy benefit concerns tend  to focus on operational issues, such as copayments and ordering  medication refills. A few VPEs noted that when questions about the  national formulary are raised during VSO meetings, they are usually  patient-specific and addressed outside of the meetings.
At the national level, the Chief Consultant from VA’s PBM said that, as  necessary, he discusses national formulary issues at VSO meetings held by  VA’s Under Secretary for Health on a quarterly basis; however, the Chief  Consultant has only attended one of these meetings in the past 6 years. He  said that he also receives occasional questions from VSO representatives  about the national formulary.
Outside of VSO meetings, most VPEs and medical center officials said that  VA obtains beneficiary input on the national formulary through complaints  by veterans or those acting on their behalf, such as providers, patient  advocates, or members of Congress. Almost all VPEs noted that, at the  regional level, they do not receive many complaints related to the national  formulary and that most complaints are handled locally. Officials from  three of the four medical centers we spoke with discussed receiving  complaints on the national formulary. For example, an official from one  medical center said that the medical center receives complaints from  patients who transferred to VA from the private sector and want to stay on  a medication that is not on VA’s national formulary.
Officials from VA’s PBM told us that, at the national level, they  occasionally receive complaints about the national formulary, but they do  not routinely monitor beneficiary input in a centralized way. For example,  while patient advocates are required to collect data on veteran complaints  at medical centers, PBM officials reported that they do not have  information on these or other local complaints. PBM officials also told us  that while VA’s Office of Quality and Performance administers the Survey  of Healthcare Experiences of Patients, this survey is limited in scope and  they do not use it to obtain beneficiary input on the national formulary.  PBM officials reported that they are not aware of other surveys conducted  for this purpose.
Some VISNs have taken additional steps to seek beneficiary input on the  national formulary. For example, one VPE whom we interviewed conducts  site visits at medical centers in the region and talks to beneficiaries about  national formulary issues during these visits. Another VPE said that the  VISN recently added a 2-hour session at the end of its Executive  Leadership Council meetings for beneficiaries to attend and discuss  concerns. The VPE said that so far pharmacy benefit concerns have been  raised at every meeting, including concerns about access to national  formulary and nonformulary drugs. A VPE from a third VISN said that the  region tried adding comment cards for pharmacy suggestions, but that  they did not receive many suggestions.
section_title: VA’s PBM Provides National Formulary Information on Its Web Site, and Some VISNs and Medical Centers Engage in Other Activities to Educate Beneficiaries about the Drug Review Process
paragraphs: Officials from VA’s PBM told us that they make the drug review process  transparent to beneficiaries through national formulary information that is  available online. Our review of PBM’s Web site found that PBM posts the  national formulary listing via an Excel spreadsheet, with a separate  spreadsheet that highlights formulary changes. In addition, PBM provides  a link to its Ez-Minutes newsletter, which is accessible online or through  an e-mail subscription. Ez-Minutes provides a listing of national formulary  decisions, but does not provide context for these decisions, such as when  a drug is made nonformulary due to safety concerns. PBM also posts  documents related to the drug review process on its Web site, such as drug  monographs and criteria for use documents. Finally, the Web site provides  answers to frequently asked questions about the national formulary.
In addition to the information provided by VA’s PBM, some VPEs and  medical center officials described undertaking other activities to educate  beneficiaries on VA’s drug review process at the regional and local levels.  For example, one VPE whom we interviewed said that the VISN had begun  a new program called, “Formulary Awareness: Veterans Helping Veterans.”  The VPE told us that this program has a number of components including  recruiting individuals to be in waiting rooms and wear buttons that say  “Ask! Is your medication on formulary?” and providing brochures, pens,  and tent cards at medical centers with information that includes a national  formulary fact of the month. Another VPE said that the VISN sends a  newsletter to veterans in its region that includes a section on how the  national formulary works, points veterans to PBM’s Web site, and provides  pharmacist contact information if veterans have any questions. Likewise,  one medical center official whom we interviewed posts explanations  about why VA has a national formulary on the bulletin boards in pharmacy  waiting room areas. Also, officials from three of the medical centers whom  we interviewed noted that they send letters to beneficiaries when national  formulary changes impact them, and officials from the fourth medical  center said that they ask providers to inform veterans of these changes.
section_title: VA Officials Are Considering Options for Increasing Beneficiary Input and Improving the Transparency of the Drug Review Process
paragraphs: At the national level, VA officials are considering options for increasing  beneficiary input on the national formulary and improving the  transparency of the drug review process. Options were discussed during a  MAP meeting in January 2010, and while no formal decision was made, the  overall consensus was to try to work within existing lines of  communication. Following this meeting, officials from VA’s PBM told us  that MAP and the VPE Committee were in discussions to develop a  process whereby veteran input at local VSO meetings could be reported  and addressed nationally. The officials said that they would like to use  local VSO meetings as a mechanism for obtaining input, because it would  be easier for veterans to travel to meetings in their local area and these  meetings may allow for input on not only national formulary issues, but  also other pharmacy benefit issues that may be local in scope. In June  2010, options were again discussed during a meeting of MAP and the VPE  Committee. PBM’s chief consultant told us that a final decision was not  made during this meeting, but that the next step is to discuss the issue  with VHA management.
Officials from most VISNs and medical centers we interviewed told us that  there could be benefit to increasing beneficiary input on the national  formulary or improving the transparency of VA’s drug review process, and  a number gave suggestions for doing so. For example, one medical center  official said that the Ez-Minutes newsletter contains technical language  and that it would be beneficial for VA’s PBM to create something that was  easier for beneficiaries and their representatives to understand. Likewise,  a VPE suggested that national formulary changes be sent to local VSOs  along with non-technical explanations of the reasons for the changes.  Another VPE said that one way to better obtain beneficiary input on the  national formulary would be to survey patients through an independent  organization.
While VA officials are considering options for increasing beneficiary input  on the national formulary and improving the transparency of the drug  review process, they have concerns about formally involving beneficiaries  or their representatives in national formulary decisions. Specifically, this  matter was raised during the January MAP meeting around a discussion  about DOD’s Uniform Formulary Beneficiary Advisory Panel. During our  interviews, VPEs and medical center officials also raised concerns about  this issue. Their concerns included that lay people may not have the  technical knowledge to make evidence-based decisions, and that they  could be unduly influenced by direct to consumer advertising from  pharmaceutical companies. Officials were also concerned that another  layer of review would slow down the drug review process. We spoke with  DOD officials about the Uniform Formulary Beneficiary Advisory Panel,  and they said that although the panel’s input on DOD’s formulary decisions  is limited, it has provided useful feedback on how to operationalize  formulary decisions, and resulted in DOD communicating formulary  decisions in less technical terms to beneficiaries.
section_title: Conclusions
paragraphs: In 2009, VA provided millions of prescriptions to veterans through its  pharmacy benefit. While VA’s process for reviewing drugs to decide  whether they should be included on its national formulary is overseen by  its PBM, VISNs and medical centers are responsible for implementing the  nonformulary drug request process, and there is variation in the  approaches that VISNs and medical centers take. For example, some  VISNs and medical centers have more automated approaches to  adjudicating nonformulary drug requests and collecting and reporting  required data than others. In response to recommendations we made in  our 2001 report, VA established a requirement for routine nonformulary  drug requests to be adjudicated within 96 hours. However, some  adjudications continue to surpass this threshold, and data reported to  monitor timeliness are not always accurate or complete for all VISNs and  their medical centers. Additionally, reported data are only required to  include average adjudication times for nonformulary drug requests, which  do not capture the total number of adjudications that fall outside VA’s 96- hour standard. Finally, VA does not require that appeals of denied  nonformulary drug requests are resolved within a certain time frame or  that the outcomes of appeals are tracked. Given these limitations,  additional steps are needed to ensure that veterans receive clinically  necessary nonformulary drugs in a timely manner.
VA is in the process of making changes to its pharmacy IT system through  its PRE project, which could help facilitate more consistent  implementation of the nonformulary drug request process among VISNs  and medical centers. We previously reported on delays and challenges VA  has faced implementing PRE, and it remains unclear when PRE will be  complete. If PRE does not move forward, VA will continue to rely on its  current IT system to manage its pharmacy benefit and depend on locally  developed IT solutions to adjudicate nonformulary drug requests and  collect data on outcomes.
section_title: Recommendations for Executive Action
paragraphs: To provide assurance that requests for nonformulary drugs are  adjudicated in a timely fashion, we recommend that the Secretary of  Veterans Affairs take three actions. Specifically, the Secretary should  direct the Under Secretary for Health to establish mechanisms to ensure  that:  reported nonformulary drug request data are accurate and complete; reported nonformulary drug request data are collected at the request-level  and analyzed by VA’s PBM, VISNs, and medical centers at this level; and   appeals of denied nonformulary drug requests are tracked.
Additionally, we recommend that the Secretary of Veterans Affairs direct  the Chief Information Officer to clarify plans regarding when functionality  related to the nonformulary drug request process will be implemented  under PRE.
section_title: Agency Comments and Our Evaluation
paragraphs: In commenting on a draft of this report, VA stated that it generally agreed  with our conclusions and concurred with our recommendations. VA’s  comments are reprinted in appendix I. Specifically, with regard to our first  recommendation to establish mechanisms to ensure that requests for  nonformulary drugs are adjudicated in a timely fashion, VA set a target  date of October 30, 2010 for developing these mechanisms and plans to  implement them during the first quarter of fiscal year 2011. With regard to  our recommendation to clarify plans for when functionality related to the  nonformulary drug request process will be implemented under PRE, VA  acknowledged the importance of improving the nonformulary drug request  process through PRE, but stated that addressing patient safety issues in  VA’s current pharmacy software takes precedence. VA reported that the  department intends to complete field testing of currently approved PRE  increments related to patient safety by November 1, 2010. VA further  stated that it can then begin an analysis, which could be completed within  90 days, to determine how improvements to the nonformulary drug  request process will be addressed in future PRE increments. We  appreciate VA’s focus on patient safety within PRE, but reiterate the  importance of VA clarifying its plans for the remainder of the project. VA  also provided technical comments, which we incorporated where  appropriate.
We are sending copies of this report to the Secretary of Veterans Affairs  and appropriate congressional committees. In addition, the report is  available at no charge on the GAO Web site at http://www.gao.gov.
If you or your staffs have questions about this report, please contact me at  (202) 512-7114 or at dickenj@gao.gov. Contact points for our Office of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff members who made key contributions to this  report are listed in appendix II.
section_title: Appendix I: Comments from the Department of Veterans Affairs
section_title: Appendix II: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Jennifer Grover, Assistant  Director; Mark Bird; Leonard Brown; Martha Kelly; Drew Long; Denise  McCabe; Lisa Motley; Jessica Smith; Rachel Svoboda; Eric Trout; and  Merry Woo made key contributions to this report.