Drug Distribution and Reimbursement in Federal Markets

摘要

The Department of Veterans Affairs (VA) and the Department of Defense (DoD) operate health systems that offer pharmaceutical companies access to robust patient populations in certain disease spaces. With more than 18 million combined beneficiaries, many in the industry seek to improve their positioning within these markets, but are often discouraged given the required deviation from commercial practices. The VA and DoD are subject to a procurement process that is complex and highly regulated. They also utilize unique arrangements in an effort to standardize and streamline pharmaceutical procurement. For instance, the VA and DoD receive a negative distribution fee of approximately -10 percent from their contracted distributors on pharmaceutical purchases. Companies that fail to include these wholesalers in their distribution network often find that it results in low prescription fulfillment rates. Initially, many companies decide that the VA and DoD portion of sales will be too low to warrant allowing the segment to influence distribution channel design. The result is often that uptake is even lower than expected, prompting an eventual shift to accommodate federal purchasing preferences.