STATEMENT OF
FRANCES M. MURPHY, M. D., M. P. H.
ACTING DEPUTY UNDER SECRETARY FOR POLICY AND MANAGEMENT
VETERANS HEALTH ADMINISTRATIONACTING DEPUTY UNDER SECRETARY FOR HEALTH
DEPARTMENT OF VETERANS AFFAIRS
BEFORE THE
SUBCOMMITTEE ON NATIONAL SECURITY, VETERANS AFFAIRS AND INTERNATIONAL RELATIONS
COMMITTEE ON GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES

March 8, 2000

Mr. Chairman and Members of the Subcommittee:

I am pleased to have this opportunity to address GAO’s recent report concerning management of chemical and biological medical supplies. I am accompanied by Mr. John Ogden, Chief Consultant, Pharmacy Benefits Management Strategic Health Care Group.

BACKGROUND

One of VA’s missions is to ensure health care for eligible veterans, military personnel, and the public during Department of Defense (DoD) contingencies and natural, manmade, and technological emergencies. VA has assigned lead responsibility for this mission to the Emergency Management Strategic Healthcare Group (EMSHG), which is headquartered at the Martinsburg, WV, VA Medical Center. The primary responsibilities and authorities governing VA’s program implementation are:

• VA/DoD Contingency Hospital System, PL 97-174, May 1982, requires VA to serve as the primary contingency back-up to DoD medical services.

• National Disaster Medical System (NDMS), was established in 1984 by agreement between DoD, Department of Health and Human Services (HHS), VA, and Federal Emergency Management Agency (FEMA). It operates to provide capability for treating large numbers of patients who are injured in a major peacetime disaster in the United States and its territories, or to treat casualties resulting from a conventional military conflict overseas.
• Federal Response Plan, required by Pub. L. 93-288, the Robert T. Stafford Act as amended, April 1992, established the architecture for a systematic, coordinated, and effective Federal response to a disaster or emergency situation.
• Executive Order 12656, Assignment of Emergency Preparedness Responsibilities, November 1988, charged VA to plan for emergency health care services for veterans, active duty personnel, and, as resources permit, to civilians in communities affected by national security emergencies.
• Presidential Decision Directive – 62, Combating Terrorism, May 1998 tasked U.S. Public Health Service (PHS), working with VA, with ensuring that adequate stockpiles of antidotes and other necessary pharmaceuticals are maintained nationwide and to train medical personnel in NDMS hospitals. VA receives funding from the PHS to cover the costs of maintaining the pharmaceutical stockpiles.

Under the provisions of the Federal Response Plan (FRP), VA is involved in the planning for, and response to, catastrophic disasters that require federal assistance. Over the past nine years, VA has deployed over 1,000 health care personnel, and provided medical supplies, equipment (including mobile health clinics), and facilities.

Under Presidential Decision Directive 62 (PDD 62), and as part of the NDMS, VA has an agreement with USPHS to maintain four (4)caches of pharmaceuticals at strategic locations throughout the United States that may be needed for treatment of victims of an event involving weapons of mass destruction (WMD). If an event occurs, these caches would be deployed to the site of the incident with the NDMS National Medical Response Teams (NMRTs) that are maintained and directed by the Department of Health and Human Services’ Office of Emergency Preparedness (OEP). In addition, these pharmaceuticals would be used by the NMRT’s and could provide supplemental capability to local medical caregivers and facilities to treat WMD victims. VA also has an agreement with the Centers for Disease Control and Prevention (CDC) to assist with procurement and maintenance of the National Pharmaceutical Stockpile that would also be located in specific cities throughout the United States. In both instances VA receives funds from the agencies involved to procure and maintain these stockpiles for the respective agencies.

GAO REPORT - MANAGEMENT OF MEDICAL SUPPLIES

I am pleased to have this opportunity to discuss VA’s activity as a partner with OEP in the procurement, inventory, storage, maintenance and delivery of medical supplies that may be needed by NMRTs to treat victims where weapons of mass destruction mightdestruction may have been used. The development and maintenance of these stockpiles are integral parts of the Nation’s OEP’s ability to provideed needed health care following an emergency. OEP officials determine the contents of inventories; provide funding for the procurement, maintenance and deployment of the medical supplies; and determine the locations of the stockpiles at sites across the United States. The partnership between OEP and VA began in late 1995 and evolved to a formal interagency agreement in April 1997.

Mr. Chairman, the partnership of HHS’s OEP and VA’s EMSHG and Emergency Pharmacy Services (EPS) is, for pharmaceutical stockpile management, a newrelatively recent one. (Note: EMSHG has overall VA responsibility for emergency management activities. The EPS is directly responsible for managing the pharmaceutical/medical supplies stockpiles and works in coordination with EMSHG.) From the inception of the partnership, all parties attempted to meet the requirements of the program with very leanlimited staffing. Until recently, VA has managed its program using approximatelyonly one and one-half FTEEstaff nationwide. It iswas apparent to VA officials and also to the GAO review team that this insufficientstaffing was insufficient has been allotted to maintain these stockpiles up to the necessary standard. The lessons learned to date in the program, coupled with the implementationing of GAO’s recommendations,will and additional staffing resources will enable us to not only build a better system for OEP, but also a better system to support forVA’s new partnership with the Centers for Disease Control (CDC) in the National Pharmaceutical Stockpile Program.

With the above background, what follows is VA’s plan to address each of the four recommendations from the GAO report. First, GAO recommended that OEP, CDC, the Marine Corps Chemical and Biological Incident Response Force, and VA establish sufficient systems of internal control over their chemical and biological stockpile management. Management needs to reasonably make certain that personnel conduct risk assessments to ensure efficient and effective administration of the stockpiles and to organize program activities to identify and mitigate risks. That way, the stockpiles will be provided as planned when needed.. To implement this recommendation, staff from OEP has contracted with Logistics Management Institute to evaluate this program, conduct a risk assessment, and advise us on areas for improvement. We look forward to utilizing their input., EMSHG, EPS, and VA offices of Security and Law Enforcement and Acquisition and Materieal Management will work together to perform an initial risk assessment by March 1, 2000. After that, we, depending on issues or problems which present over time,will conduct ongoing risk assessments as an integral part of OEP’s program to assure that these supplies will be provided on time when requested. As part of the overall risk assessment process, VA officials have contacted the FBI for possible assistance in conducting an external risk assessment CDC is contracting independently with LMI to conduct a similar evaluation.

Second, GAO recommended that the agencies arrange for periodic, independent inventories of the stockpiles.. In January 2000, VA conducted full inventories were conductedat each cache site. Beginning no later than March 1, 2000, VA plans to conduct quarterly inventories at each site using from EMSHG, EPS, and Office of Acquisition and Materieal Management. Complete inventories, using personnel from EMSHG, EPS and the Office of Acquisition and Material Management, will also be conducted on June 1, 2000, September 1, 2000, and December 1, 2000. OEP staff will be invited to participate in these inventories. At the completion of the December 2000 inventory, the teamabove mentioned groups will review lessons learned, and decide on the frequency of future audits and the need for onsite staffing dedicated to managing ofthe stockpiles.

Third, GAO recommended that VA implement a tracking system that retains complete documentation for all supplies that have been ordered, received or destroyed.. While a tracking system was in place at the time of the audits, it is clear that the staffing to properly maintainuse the system was insufficient and the data systems needed upgrading. Based on lessons learned from the priorprevious system, in December 1999, VA included additional staff human resourcesin the pending Memorandum of Agreement (MOA) with OEP to maintain the tracking system. Furthermore, VA is now using an updated tracking system for use in the OEP and CDC’s National Pharmaceutical Stockpile Program. The updated system provides documentation for activities associated with the inventory management of the stockpiles. When fully implemented the new system will also allow continuous, real- time access (read only) by OEP and CDC staff. In addition, inventory reports will be available and provided to OEP and CDC officials on a regular and ad-hoc basis.

Fourth, GAO recommended that supplies be rotated properly.. The updated system described aboveprovides reports indicating future expiration dates. These reports allow for improved planning for ordering, receiving, shipping and rotating stock at each location on a timely basis. These capabilities enable EPS officials to keep stockpile manipulations to a minimum and assure effective and appropriate dating of the supplies.

Mr. Chairman, I would like to close with a description ofon additional actions taken since the GAO review was in process. First, as mentioned above,a new MOA between OEP and VA has been developedsigned by HHS and is in the clearance process by VA. The MOA incorporatesincludes the recommendations from the GAO audit report. Second, the VA employee who had responsibility for managing this program previously did so as an ancillary duty. In October 1999, VA selected a permanent permanent, full-time director of emergency pharmacy activities. In addition, the staffing of the program has been increased under agreement with HHS by five positions. forThird, all refrigeration issues cited in the GAO report have been addressed. Fourth, numerous meetings and conference calls between OEP and VA officials have occurred to address the issues raised by GAO and the new MOA. Fifth, in September 1999, all stockpiles were replenishedrestocked based, in part, on information from the GAO review. In addition, during the week of December 27, 1999 and also during the full inventories conducted in January 2000,, the amount of diazepam on hand at each stockpile was revalidated.again reviewed to validate the amount of diazepam on hand. (This action was taken due to the statement by GAO that 1,000 diazepam autoinjectors were missing and our concern that diversion of a controlled substance may have occurred. I am pleased to report that all diazepam is accounted for and our review does not substantiate any missing diazepam.)In fact, we had also reviewed this purported situation following the GAO exit briefing in late September 1999. EPS staff were not made aware of this allegedpurported shortage during the audit.We provided the results of this review to GAO. Sixth, in January 2000, the first quarterly inventory of each cache was completed by EPS with assistance from A&MMS and OEP staff Seventh, we have reviewed space needs at each site based on the expansion of the caches and will soon relocate two caches to more suitable storage locations. EighthSeventh, to improve security of each the caches, we will install locking devices at the access point that will record date, time and the individual gaining access. We are seeking technology that will provide remote monitoring of the same. Eighth, in February 2000, all ordering activities were have beenassigned to VA’s National Acquisition Center; therefore, meeting one of the GAO’s recommendations regarding separation of duties.

Mr. Chairman, the efforts of OEP and EPS staff to develop, maintain, and deploy emergency supplies iswere whave been adequate but with the limitations identified by GAO. However, the EPS functionssuccessful and will be more successful in the future with the actions that VA and OEP are taking to strengthen our programs. We appreciate the benefits of GAO’s work on the Congress’s behalf. Should incidents involving the use of weapons of mass destruction occur we are prepared to meet our responsibilities as a part of the Nation’s readiness capability.