Department of Veterans Affairs pharmaceutical purchasing agreements

(a) Formulary-Based pricing and value-Based agreements (1) In general Subchapter II of chapter 81 of title 38, United States Code, is amended by inserting after section 8129 the following new section: 8130. Pharmaceutical purchasing agreements and value-based initiatives (a) Negotiation of supplemental discounts (1) In addition to the limitations on the prices of drugs in effect pursuant to section 8126 of this title, the Secretary may negotiate additional discounts or price concessions with manufacturers of drugs procured by the Department. (2) In conducting negotiations under this paragraph, the Secretary may— (A) take into consideration the placement or tiered status of a drug on the national formulary of the Department; and (B) enter into an agreement with a manufacturer under which the manufacturer offers a discounted price or rebate for a drug in exchange for preferred status for the drug on the national formulary of the Department, if the Secretary determines the agreement will provide clinically appropriate outcomes for veterans and net cost savings or value to the Department. (3) Nothing in this subsection shall be construed to supersede the price limitations under section 8126 of this title. The Secretary shall ensure that any agreement entered into under this subsection with respect to a drug that is a covered drug under such section results in prices that are lower than the maximum price allowed under such section for such drug. (b) Use of flexible purchasing arrangements (1) To the extent practicable, the Secretary shall use industry best practices in the procurement of drugs and medical supplies, including the use of blanket purchase agreements, ordering agreements, and other volume-leveraging contracts to achieve favorable pricing. (2) The Secretary may pursue value-based purchasing arrangements with manufacturers of drugs and biological products to be included on the national formulary. Such arrangements may include contracts under which the manufacturer agrees to provide the drugs or biological products to the Secretary in exchange for payment in an amount that is determined based upon the effectiveness of the drug or biological product for veterans to whom the drug or biological product is prescribed. If the Secretary enters into such a contract under this paragraph, the Secretary shall ensure that the contract includes a mechanism to monitor the effectiveness of the drug or biological product and to adjust payments or rebates accordingly. (c) Outcome and cost-Effectiveness evaluations (1) The Secretary shall conduct periodic reviews of the outcomes and budgetary effects associated with major changes to the national formulary or pharmaceutical initiatives of the Department. Not later than 180 days after concluding a periodic review under this paragraph, the Secretary shall submit to the Committees on Veterans’ Affairs of the Senate and House of Representatives the results of the review. (2) Not later than one year after implementing any significant action affecting the national formulary, including adding a high-cost drug with usage criteria or removing a clinically used drug from the formulary, the Secretary shall evaluate the effects of that action on veteran health outcomes, drug use patterns, and overall costs to the Department. The Secretary shall make findings from such evaluations available to the Committees on Veterans’ Affairs of the Senate and House of Representatives and use the findings to inform future formulary decisions and purchasing agreements. (d) Biological product defined In this section, the term biological product has the meaning given such term in section 351(i)(1) of the Public Health Service Act (42 U.S.C. 262(i)(1)).. (2) Clerical amendment The table of sections at the beginning of such chapter is amended by adding at the end the following new item: 8130. Pharmaceutical purchasing agreements and value-based initiatives.. (b) Establishment of tiered schedule for copayments (1) In general Section 1722A of title 38, United States Code, is amended by adding at the end the following new subsection: (d) (1) For the purpose of encouraging the use of clinically appropriate, cost-effective drugs by veterans while maintaining access to nonformulary drugs that are medically necessary, the Secretary shall establish a tiered schedule for the amount of the copayments charged to veterans for drugs furnished under this chapter. (2) Under the tiered schedule established under this subsection, the amount of a copayment for a 30-day supply of a generic drug or a drug listed on the national formulary of the Department shall be lower than amount of a copayment a 30-day supply of a brand-name drug or a drug not included on such national formulary.. (2) Update of cross-reference Subsection (a)(3)(D) of such section is amended by striking section 491 and inserting section 2732.