The bill adds a new Subchapter VI to title 38 that requires the Department of Veterans Affairs to maintain a single national formulary managed by the VA’s Pharmacy Benefits Management Service, prohibits local formularies except via a narrowly defined waiver or the nonformulary process, and mandates public reporting of formulary changes. It creates a statutory Pharmacy and Therapeutics (P&T) Committee with conflict-of-interest rules, requires a standardized electronic nonformulary request and tiered appeals process with firm decision deadlines, and establishes medication therapy management and periodic therapeutic-class reviews.
Separately, the bill authorizes the VA to negotiate supplemental discounts and enter value-based purchasing agreements tied to outcomes, requires post-implementation evaluations of major formulary actions, and directs the Secretary to adopt a tiered copayment schedule favoring formulary/generic drugs. For providers, procurement teams, manufacturers, and veterans, the measure reallocates decision authority, introduces new compliance deadlines and reporting duties, and creates both new negotiating leverage and operational work to implement the reforms.
At a Glance
What It Does
It centralizes formulary authority by making the national formulary uniform across all VA facilities and places management responsibility with the Pharmacy Benefits Management Service. The bill sets strict procedural requirements: an electronic nonformulary request system integrated with the EHR, time-bound decisions (96-hour initial decision, seven-day appeal decision), monthly P&T reviews targeting a 120-day decision window for new FDA drugs, and public summaries of major formulary changes.
Who It Affects
Veterans receiving VA pharmacy services, VHA clinicians and pharmacists who prescribe or request nonformulary drugs, VISN and medical center directors who previously controlled local formularies, VA procurement and PBM staff negotiating drug contracts, and pharmaceutical manufacturers engaged in VA pricing discussions.
Why It Matters
This is a structural shift: the VA moves from a network of locally managed formularies to a single, centrally managed formulary with statutory procedures and procurement tools. That increases the VA’s bargaining leverage, standardizes patient access pathways, and creates measurable timelines and reporting obligations that will affect clinical workflows, contracting strategy, and veteran out-of-pocket costs.
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What This Bill Actually Does
The bill writes into law a single national formulary for the Veterans Health Administration and assigns authority for that formulary to the Pharmacy Benefits Management Service. Local VISNs and medical centers may not keep independent formularies that add drugs outside the national list, except when a clinician follows the nonformulary request process or when a national-level, time-limited waiver is issued for a defined patient group.
Waivers are to be reviewed centrally with explicit consideration of clinical need, safety, and cost-effectiveness.
To decide what belongs on the formulary, the VA must establish a Pharmacy and Therapeutics Committee made up of VA-employed physicians, clinical pharmacists, and pharmacoeconomists with required representation for geriatrics and mental health. Committee members must disclose financial interests annually and be prohibited from participating in decisions where a conflict exists.
The Committee must meet regularly (monthly or bimonthly) and aims to resolve formulary inclusion or exclusion for newly FDA-approved drugs within about 120 days, using evidence-based monographs, real-world outcomes data, and pharmacoeconomic analyses. For significant additions or removals the VA must publish a clinical rationale and, when feasible, hold public briefings—while excluding proprietary pricing information.Clinicians can submit nonformulary drug requests through a standardized electronic system integrated with the VA’s electronic health record.
The bill requires an initial decision within 96 hours and, if denied, gives the clinician and veteran a right to appeal under a tiered process: regional secondary review followed by a national-level final decision. Appeals decisions must be rendered within seven days of filing.
Approvals for nonformulary drugs travel with the veteran across VA facilities and VISNs, preserving the original terms and monitoring requirements.On purchasing, the VA is explicitly authorized to negotiate supplemental discounts and enter value-based contracts that tie payments to clinical effectiveness, provided negotiated prices remain below statutorily established ceilings. The Secretary must conduct outcome and budgetary reviews after major formulary changes (with a 180-day reporting cadence for periodic reviews and a one-year evaluation after significant actions) and may use blanket purchasing and volume-leveraging contracts.
Finally, the bill requires a tiered copayment schedule favoring generics and formulary drugs and creates a short-lived Veterans Formulary Advisory Committee to provide semiannual stakeholder feedback for two years.
The Five Things You Need to Know
The bill bars VISNs and individual VA medical centers from maintaining local formularies that add drugs not on the national formulary, except via the standardized nonformulary process or a time-limited national waiver.
Nonformulary requests must be submitted through an EHR-integrated electronic system; the VA must communicate an initial decision within 96 hours and rule on appeals within seven days of appeal filing.
The Pharmacy and Therapeutics Committee must meet at least monthly (or bimonthly), include VA physicians, pharmacists, and pharmacoeconomists (with geriatrics and mental health expertise), require annual financial disclosures, and aim for formulary decisions on new FDA approvals within 120 days.
The Secretary may negotiate supplemental discounts and enter value-based purchasing contracts tied to drug effectiveness, but any agreement must still result in prices below the statutory maximums in section 8126 and include mechanisms to monitor outcomes and adjust payments.
The bill requires a tiered copayment schedule under 38 U.S.C. §1722A: copays for a 30‑day supply of generic or national formulary drugs must be lower than copays for brand-name or nonformulary drugs.
Section-by-Section Breakdown
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Establish and uniformly implement a national formulary
This section makes the national formulary the single authoritative drug list for all VA medical facilities and assigns day-to-day management to the Pharmacy Benefits Management Service. It forbids local formularies from adding drugs outside the national list, but preserves clinical pathways for nonformulary access via a standardized request process and allows national-level, time-limited waivers for a defined patient population. Practically, this centralizes both clinical and inventory control, which will require VISNs to conform local procurement, stocking, and clinic protocols to national policy.
Pharmacy and Therapeutics Committee: composition, COI, and review cadence
The bill creates a P&T Committee composed of VA-employed physicians, clinical pharmacists, and pharmacoeconomists, with specified expertise areas (geriatrics and mental health). It requires annual financial-disclosure statements and prohibits members from voting on matters where they have conflicts. The mandate for at least monthly meetings and a 120-day target for decisions on new FDA approvals codifies a faster review timeline and binds clinical review to pharmacoeconomic analysis and alignment with DoD/VA guidelines.
Standardized, EHR-integrated nonformulary request and time-limited appeals
This section requires the VA to implement an EHR-integrated electronic system for clinicians to request nonformulary drugs, sets a 96-hour initial decision deadline, and establishes a tiered appeals path culminating in a national-level final decision within seven days of an appeal. It also mandates that nonformulary approvals remain valid across VISNs when a veteran moves care sites. The provision forces nationwide consistency in criteria and timelines, which will affect prescribing workflows and regional pharmacy operations.
Therapeutic-class reviews and medication therapy management
The Secretary must require periodic therapeutic-class reviews and expand medication therapy management, with particular attention to polypharmacy and high‑risk medications. Clinical pharmacy specialists are tasked with comprehensive reviews for complex patients and the VA must run drug-use reviews to spot duplication, inappropriate prescribing, or dosing issues and deliver provider education or patient outreach based on findings. This elevates pharmacy clinical services and internal quality-control functions.
Pharmaceutical purchasing agreements and value-based initiatives
Inserted into the procurement chapter, this section allows the VA to negotiate supplemental discounts, offer preferred formulary status in exchange for rebates or discounts, and pursue value-based contracts where payment is tied to measured effectiveness. It requires monitoring mechanisms in such contracts, periodic outcome and budgetary reviews (with reporting deadlines), and preserves statutory price ceilings under section 8126—so negotiated terms must still result in prices below those maximums.
Tiered copayment schedule tied to formulary status
This amendment instructs the Secretary to create a tiered copayment schedule that charges lower copays for generics and drugs on the national formulary and higher copays for brand‑name or nonformulary drugs. The change is a demand-side lever intended to influence veteran choice and prescribing patterns, but it also creates an administrative need to classify drugs consistently according to tier status.
Short-term advisory body for clinician and veteran input
The bill creates a ten-member advisory committee of front-line providers, pharmacists, and stakeholder representatives to meet at least semiannually and review proposed formulary changes. The committee’s advice is explicitly advisory, and it sunsets two years after establishment—designed to give early stakeholder input during implementation rather than permanent external governance.
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Explore Veterans in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Veterans seeking consistent access: Standardized formulary rules, a formal nonformulary request pathway with rapid decision deadlines (96 hours/7 days), and portability of approvals across VISNs should reduce variations in access when veterans change facilities.
- VA Pharmacy Benefits Management Service and central procurement teams: Centralized authority and statutory authorization to pursue supplemental discounts and value-based contracts increase negotiating leverage and alignment of procurement with clinical priorities.
- Clinical pharmacy specialists and medication management programs: The law expands roles for drug therapy management, polypharmacy reviews, and clinical pharmacy interventions, raising the profile and scope of pharmacy clinical services.
- Health systems analysts and budget officers at VA: Mandatory outcome and budgetary evaluations after major formulary changes give finance and program evaluators clearer data to assess return on investment and inform future purchasing decisions.
Who Bears the Cost
- VISN directors and local medical centers: They lose unilateral ability to carry local formulary items, must adapt inventory and clinical protocols to national decisions, and may need to seek time-limited national waivers for patient populations.
- VA clinicians and support staff: Integration of a new EHR-based nonformulary workflow, faster decision timelines, and additional appeals procedures will add administrative work and require training and workflow redesign.
- VA contracting and PBM administration: Negotiating and managing value-based contracts, monitoring outcomes, and producing mandated reports (180-day reviews, one-year post‑implementation evaluations, annual appeals reporting) will increase staff workload and require new analytic capabilities.
- Some pharmaceutical manufacturers, particularly smaller firms: Pressure to offer supplemental discounts or enter outcomes-based arrangements could compress margins or raise barriers to preferred placement on the national formulary.
- Veterans using brand-name or nonformulary drugs: The tiered copayment schedule expressly increases relative out-of-pocket costs for brand-name or nonformulary medications compared with generics and formulary options.
Key Issues
The Core Tension
The central dilemma is between creating system-wide consistency and purchasing leverage to lower costs and equalize care, and preserving local clinical autonomy and individualized access: faster, centralized decision-making and tighter procurement can produce savings and uniformity, but they also risk one-size-fits-all decisions that may not fit local patient populations or rare clinical needs.
The measure trades local clinical discretion for centralized consistency and purchasing power. Centralization may reduce geographic disparities in access but could also create rigidities: time-limited waivers and the nonformulary process are the only explicit escape valves, and the bill leaves open how frequently waivers will be granted and on what evidence thresholds.
The statutory timelines (96 hours for initial nonformulary decisions, seven days for appeal decisions, and a 120‑day goal for new drug determinations) push for speed, but the bill does not specify staffing levels, adjudication standards for complex cases, or resources for EHR integration—raising implementation risk if VA does not fund operational capacity.
Value‑based purchasing is authorized but operationally challenging: measuring real-world effectiveness, attributing outcomes to a product, agreeing on metrics with manufacturers, and reconciling confidentiality around pricing will all require substantial data infrastructure and legal sophistication. The bill preserves confidentiality for pricing but requires public clinical rationales—so stakeholders may still lack the full context for decisions.
Finally, the P&T Committee is limited to VA employees, which reduces COI risk but may constrain external expertise; the short two‑year advisory committee term provides early stakeholder input but not long-term public oversight.
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