April 25, 2016
The US Department of Veterans Affairs (VA) recently announced a policy change that will allow it to purchase drugs manufactured in countries that do not have a procurement agreement with the United States—something that was previously prohibited by the Trade Agreements Act (TAA).
Under the TAA, contractors providing pharmaceutical products to the VA can only provide US-made drugs. However, an exception to the law provides that the Government can purchase non-TAA-compliant products when it determines that no TAA-compliant products are available.
Drugs that are not TAA-compliant have traditionally been refused “non-availability” exceptions by the VA. However, the new policy seems to indicate that the exception will now be applied to all single source and multiple source drugs that do not comply with the TAA, which are now required to be made available on Schedule 65 I B Federal Supply Schedule (FSS) contracts. Additionally, the VA Contracting Officer is now provided authority regarding non-availability determinations.
For the many drug manufacturers who use active pharmaceutical ingredients from India and China, the policy reversal will have an immediate impact. Drug manufacturers that do not hold a Schedule 65 I B FSS contract must set up an Interim Agreement until a VA schedule contract is established. Drug manufacturers that do hold a current FSS contract but have non-TAA compliant drugs must submit a Request for Modification. Products should be made available as soon as possible.
According to the VA website, Non-Federal Average Manufacturer’s Price calculations for covered drugs must be submitted by manufactures by April 26, 2016; request for modifications must be made by May 6, 2016; and non-compliant TAA contracts must be added to an FSS contract or Interim Agreement by June 6, 2016.