COMMENTARY

Strengthening Federal Healthcare through Smarter Pharmaceutical Procurement

To modernize procurement and strengthen the federal healthcare system, the VA should update its policies to reflect today’s supply chain realities.

Dave Arnold
August 11, 2025

The Departments of Veterans Affairs (VA) and Defense (DoD) face mounting pressure to modernize how they deliver medications and healthcare products to millions of active-duty servicemembers and veterans who rely on their care. While IT modernization has been the focus of recent headlines, there’s an equally critical—and often overlooked—area ripe for modernization and transformation: pharmaceutical procurement.

Outdated procurement systems and fragmented logistics networks make it more challenging for federal agencies to maintain a reliable, cost-effective supply of essential drugs. In response, Congress is advancing bipartisan legislation to require the VA and DoD to adopt cloud-based inventory tools, while agencies like the Defense Logistics Agency are working to increase visibility into the pharmaceutical supply chain.

What’s often missing from this conversation is how private sector partners—specifically government-only pharmaceutical suppliers—can support and accelerate these modernization efforts.

Unlike traditional commercial distributors, government-only suppliers tailor every aspect of their infrastructure, analytics, and operations to the unique needs of federal agencies. This helps the government scale pharmaceutical supplies, reduce administrative burden, and deliver better pricing outcomes for taxpayers and more streamlined service for beneficiaries.

One advantage of government-only suppliers is their investment in technology and data systems that improve forecasting accuracy for VA and DoD pharmaceutical demand. Because the agencies do not provide demand forecasts to suppliers, a company’s ability to predict purchasing patterns through advanced systems and processes is essential to ensuring consistent and reliable access to medications.

Forecasts allow government-only suppliers to signal appropriate production levels to manufacturers in advance—reducing the risk of supply gaps and securing inventory before it becomes scarce. In contrast, original manufacturers who sell directly to the government do not typically invest in the resources needed to manage this market segment with the depth and accuracy of a government-only supplier.

Government-only suppliers also provide agencies with early warnings of potential supply disruptions. By closely monitoring market dynamics and collaborating with manufacturers, they are often able to alert federal procurement teams in advance, creating time to plan alternatives and avoid shortfalls that could impact patient care. For example, when COVID-19 was causing drug disruptions across the country, government-only suppliers’ could step in to help the VA secure needed drugs that were in short supply.

Using advanced data analytics and automated fulfillment technologies, these suppliers are helping federal buyers improve procurement and operational efficiency. They can do this by tracking real-time demand, customizing product configurations based on actual VA and DoD prescription fulfillment trends, and integrating customer feedback, resulting in reduced waste, avoiding stockouts, and ensuring more stable access to care. For example, if a particular dosage form or unit size is routinely prescribed across the VA, these suppliers often pre-package that configuration to streamline delivery, minimize cost, and reduce the risk of dispensing errors.

These suppliers effectively sequester supplies for federal customers, preventing depletion of supplies by commercial buyers during times of market constraint. For high-demand or limited-supply items, that distinction is critical. These government-only suppliers have been critical in helping the government address and prevent shortages of drugs across a range of therapies.

As Congress advances bipartisan efforts to modernize procurement and strengthen supply chain performance, government-only suppliers offer a valuable resource. With deep knowledge of federal acquisition systems and a clear understanding of the VA and DoD’s unique demand and supply patterns, these partners help bridge access to care for those who serve and have served.

Yet despite the clear benefits these suppliers offer, VA policies limit their ability to operate at full capacity. To modernize procurement and strengthen the federal healthcare system, the VA should update its policies to reflect today’s supply chain realities and more fully integrate these partners into its procurement modernization strategy.

If federal agencies want to modernize not just their systems but also their results while driving costs down over $1 billion annually, they should look to these specialized partners as innovation enablers—similar to the role SpaceX has played for NASA—at the core of a smarter, more responsive healthcare supply chain.

See the article here: Strengthening federal healthcare through smarter pharmaceutical procurement