In a significant policy reversal that will affect many pharmaceutical manufacturers and suppliers – and that will require immediate action by many pharmaceutical manufacturers – the Department of Veterans Affairs is now requiring that all covered drugs under the Veterans Health Care Act be offered on Federal Supply Schedule (FSS) contracts, regardless of whether they meet the “country of origin” standards of the Trade Agreements Act (TAA).

Under the TAA, government agencies, including the VA, are generally prohibited from procuring goods that are not made in either the United States or certain “designated countries.” A large number of drug manufacturers have products that aren’t TAA-compliant due to being manufactured with active pharmaceutical ingredients (API) from non-designated countries like India and China.

However, VA contracting officers will now have the authority to issue “non-availability determinations,” allowing the VA to list non-TAA-compliant covered drugs on FSS contracts under certain circumstances. This means that, for the first time, FSS contracts will be open to hundreds of pharmaceutical products that are manufactured in non-TAA designated countries.

The VA is fast-tracking implementation of the new policy. Manufacturers that already have FSS contracts must submit a Request for Modification to add their non-TAA-compliant products, and companies that currently do not have an FSS contract, because all their covered drugs are non-TAA compliant, must enter into an Interim Agreement with the VA, enabling their covered drugs to be considered for an FSS contract. Manufacturers should be aware of these key deadlines:

  • April 26, 2016: Submit Non-Federal Average Manufacturer Price (FAMP) information for TAA non-compliant covered drugs, if the company has not already been submitting Non-FAMPs for those products.
  • May 6, 2016: Submit signed mass modifications, requests for modification to add TAA non-compliant covered drugs, and Interim Agreements.
  • June 6, 2016: All TAA non-compliant drugs must be on an FSS contract or Interim Agreement.

For more information about this policy change, and what manufacturers need to do in the coming days and weeks to comply, read our recent Client Alert, “Veterans Affairs to Permit Acquisition of Non-TAA-Compliant Drugs.”