Report 4—Drug Benefits—Veterans Affairs Canada
Audit at a Glance Report 4—Drug Benefits—Veterans Affairs Canada
What we examined (see Focus of the audit)
This audit focused on whether Veterans Affairs Canada managed the drug component of its Health Care Benefits Program to contribute to the health of its veteran population by
- providing coverage for drugs based on evidence,
- using cost-effectiveness strategies, and
- monitoring the utilization of drugs covered.
This audit is important because Veterans Affairs Canada is responsible for providing coverage for drugs that contribute to the health and well-being of veterans, some of whom are considered vulnerable and have complex health needs such as mental health conditions.
Why we did this audit
The Government of Canada provides prescription drug coverage for about 1.1 million Canadians who are members of eligible groups. These include First Nations people living on or off reserves, Inuit, some new immigrants, members of the military and the RCMP, some veterans, and inmates in federal penitentiaries. Based on information provided by departments responsible for these programs, in the 2013–14 fiscal year, the federal government spent approximately $501 million providing drug benefits to these populations.
In our 2004 report entitled Management of Federal Drug Benefit Programs, we reported on the drug benefits programs managed by six federal departments, including Veterans Affairs Canada. The Department’s Health Care Benefits Program provides drug benefits for eligible veterans, some of whom are considered vulnerable and have complex health needs such as mental health conditions. Further, approximately 36 percent of its recipients are over 80 years of age. In the 2014–15 fiscal year, the drug component of the Health Care Benefits Program covered drugs for roughly 51,000 veterans at a cost of $80 million dollars.
What we concluded
We concluded that Veterans Affairs Canada did not adequately manage the drug component of its Health Care Benefits Program. The Department used some cost-effectiveness strategies to manage drug costs, but it did not use all the information at its disposal to decide and document which drugs it would cover. The Department monitored the utilization of some higher-risk drugs, but it has not developed a well-defined monitoring approach that could help detect trends important to the health and well-being of veterans as well as to the management of the program.
What we found
Management of the drug benefits list
Overall, we found that Veterans Affairs Canada did not have an adequate process for making evidence-based decisions related to its drug benefits list. It did not have procedures in place to help ensure that its Formulary Review Committee systematically reviewed appropriate evidence to support decisions about changes to the drug benefits list. Except for considering the recommendations of the Canadian Agency for Drugs and Technologies in Health, it had not determined what types of evidence the Committee should consider. We reviewed 32 Committee decisions and found that for 17 of them, the Department could not provide evidence that it had appropriately considered veterans’ needs, current health practices and policies, clinical research, and cost-effectiveness. We also found that no timelines had been established for updating the drug benefits list with the Committee’s decisions.
Further, Veterans Affairs Canada has done little to analyze the utilization of drugs not available on the drug benefits list but accessible on a case-by-case basis to eligible veterans. This limits its ability to identify which of these drugs are routinely approved when requested and which could be added to the drug benefits list. Doing this would reduce the administrative burden for veterans and lower the Department’s administrative costs.
This is important because the Department is responsible for contributing to veterans’ health by providing evidence-based drug therapies. Using a systematic decision-making process would result in consistent evidence-based decision making that considers safety risks and facilitates veterans’ access to approved drugs.
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Recommendation. Veterans Affairs Canada should implement a decision-making framework that specifies the type of evidence and how it is considered. The Department should use this framework to decide which drugs to pay for and to what extent it will pay for them. The framework should also include requirements that the Department update the drug benefits list on a timely basis.
Recommendation. Veterans Affairs Canada should develop a well-defined approach to drug utilization monitoring that serves the needs of veterans and helps the Department manage its drug benefits program.
Cost-effectiveness strategies
Overall, we found that Veterans Affairs Canada used some cost-effectiveness strategies to manage drug costs under its Health Care Benefits Program. The Department has a generic drug substitution policy. In addition, it has entered into agreements with some pharmacy associations to secure lower prices, including reduced markups for some drugs and reduced dispensing fees. However, it has not assessed the results of these strategies. Furthermore, it has not implemented strategies related to expensive new drugs entering the market or to managing the rising costs of marijuana for medical purposes.
This finding is important because Veterans Affairs Canada is responsible for providing coverage for drugs that contribute to the health and well-being of veterans. Since the drug component of its Health Care Benefits Program is federally funded, the Department must use cost-effectiveness strategies as much as possible to prudently manage public funds.
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Veterans Affairs Canada used some cost-effectiveness strategies to manage drug costs
Recommendation. Veterans Affairs Canada should periodically review its cost-effectiveness strategies to identify whether:
- they are up to date and are leading to reduced costs for drugs and pharmacy services, and
- other potential strategies should be pursued alone or in collaboration with other federal departments.
Recommendation. Veterans Affairs Canada should explore ways in which the costs associated with marijuana for medical purposes can be contained.
Monitoring of drug utilization
Overall, we found that Veterans Affairs Canada had implemented most of the recommendations that related to monitoring of drug utilization that we followed up from our 2004 audit on drug benefits programs. However, we found that Veterans Affairs Canada did not have a well-defined approach for monitoring drug utilization among veterans to help identify and prevent the inappropriate utilization of drugs and to detect trends that could inform program management decisions. For example, the Department manages the only publicly funded plan that covers marijuana for medical purposes, but it does not monitor trends that may suggest high-risk utilization.
This is important because effective drug utilization monitoring can help identify prescription drug abuse, flag potential drug-related problems at the time of dispensing, and help ensure that the Department obtains the information it needs to manage its drug benefits program.
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Veterans Affairs Canada did not have a well-defined approach to monitoring drug utilization
Recommendation. Veterans Affairs Canada should develop a well-defined approach to drug utilization monitoring that serves the needs of veterans and helps the Department manage its drug benefits program.
Entity Responses to Recommendations
The audited entities agree with our recommendations, and have responded (see List of Recommendations).
Related Information
| Report of the | Auditor General of Canada |
|---|---|
| Type of product | Performance audit |
| Topics | |
| Audited entities | |
| Completion date | 1 April 2016 |
| Tabling date | 3 May 2016 |
| Related audits |
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