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For VA-approved research and operations projects, the Pharmacy Managerial Cost Accounting National Data Extract contains information on the cost of a medication itself (variable: act_cost) as well as the dispensing fee (variable: dispcost). Sum the actual total cost of the medication and the dispensing fee to calculate the total drug cost. For more information, see the guidebook “VIReC Research User Guide: Pharmacy Managerial Cost Accounting National Data Extract (PHA MCA NDE)” Available on the internal VA intranet only (https://vaww.virec.research.va.gov/RUGs/MCA-NDEs/RUG-MCA-PHA-NDE.pdf).
For those looking for cost information outside of a VA-approved project, or for cost information more generally, the VA National Acquisition Center provides a searchable Pharmaceutical Catalogue which includes the Federal Supply Schedule (FSS) price and Big 4 agency price (VA, Department of Defense, Public Health Service, and the U.S. Coast Guard) of specific drugs.
The actual amount VA Pharmacy Benefits Management (PBM) spends on a medical product may be lower than the FSS price or Big 4 price after rebates and discounts. The components of the Actual Total Cost (e.g., contracted price paid for the drug product) is confidential and may not be disclosed. If researchers need to report the pharmaceutical unit price, HERC recommends using the FSS price listed on the VA National Acquisition Center Pharmaceutical Catalog.
Additional information on the cost of pharmaceuticals for cost-effectiveness analysis is available in the HERC presentation, “Pharmaceutical Costs for Cost-Effectiveness Analysis,” and the webpage “Determining the Cost of Pharmaceuticals for a Cost-Effectiveness Analysis.”
Negative costs in the MCA pharmacy data are often due to a medication being returned, and data users should treat these negative costs as valid and keep these costs in the dataset. See the guidebook Research Guide to the Managerial Cost Accounting National Cost Extracts for additional details about the reasons for the presence of negative costs. We recommend applying cost cleaning procedures (see the question How do I correct outliers in pharmacy data?) to the absolute value of the cost and retaining the original negative sign.
VA uses the Managerial Cost Accounting Office (MCA) for fiscal management and to determine the cost of patient care. National Data Extracts (NDEs) have been created to facilitate access to workload and cost information. These extracts report costs of inpatient and outpatient encounters, reflecting actual resource use within VA. These data contain rare outlier observations with cost inconsistent to the care provided.
HERC has developed SAS code to flag and adjust outlier observations in the Managerial Cost Accounting Pharmacy National Data Extract (the MCA PHA NDE). The PHA file contains prescription-level records which include detailed cost information on each prescription filled, both inpatient and outpatient.
In order to identify costs that are likely to be truly erroneous, rather than legitimately expensive medications, strict criteria are applied to define outliers. The product cost of the medication and the dispensing cost are considered separately. In consultation with MCA and after review of cost distributions by VA Class, product cost outliers are defined as costs greater than 120% of the maximum price of all drugs in the VA drug class, as shown in the drug price list from Pharmacy Benefits Management Services. This criterion is designed to select only gross outliers. Since dispensing costs are typically low and do not vary much across VA drug class, the outlier cut-off for dispensing costs is set at a fixed $100. (Note that median dispensing costs by VA drug class range from $3.56 to $9.95 in FY15.) Absolute values are used in order to identify both positive and negative outliers. Out of 243 million records in the FY15 PHA file, 33,410 product costs (0.014%) and 158,635 dispensing costs (0.065%) are classified as outliers by these criteria.
Both product and dispensing outlier costs are adjusted by replacing the outlier value with the median cost for the VA drug class (and retaining the sign of the original cost). Although this code is designed to adjust the prescription-level records in the MCA PHA dataset, with some additional coding to restrict to outpatient fills and summarize by dispensing date, the prescription-level adjustments can also be used to adjust the daily pharmacy cost records in the MCA Outpatient NDEs.
This work was conducted as part of a project funded by the Geriatric & Extended Care Data & Analysis Center (GECDAC). Researchers interested in obtaining this code should contact HERC at herc@va.gov.
