PRIME VENDOR PURCHASING OF PHARMACEUTICALS IN THE VETERANS AFFAIRS HEALTH-CARE SYSTEM

The development of a prime vendor system of pharmaceutical procurement and distribution in the Department of Veterans Affairs (VA) is descri bed. The traditional system of pharmaceutical procurement and distribu tion in the VA required large stockpiles of the pharmaceuticals that h ad been needed the previous year, a system that was inefficient and fu ll of hidden markups and other unnecessary fees. In late 1991, the VA began a pilot test of a prime vendor system, in which three wholesaler s were selected to provide pharmaceuticals to 33 VA medical centers. U nder the new system, pharmacies placed orders electronically, directly with the prime vendor, and payments were taken from funds obligated i n advance. The benefits of the new system included reduced costs, fast er turnaround of orders, higher fill rates, and higher satisfaction am ong users. In 1994, the VA ceased operation of its traditional depot s ystem for pharmaceuticals. The implementation of a prime vendor procur ement system for pharmaceuticals within the VA improved system respons iveness, increased satisfaction of system users, and reduced expenses.