DoD Prescribes New Pharmacy Benefit

Defense health officials already were concerned about inconsistencies in the pharmacy benefit when the General Accounting Office reviewed the system in 1998. The GAO called for a more coordinated system that controls costs and makes prescription drugs safer and more evenly available at military treatment facilities, through the DoD National Mail Order Pharmacy and at retail pharmacies in networks under TRICARE, the defense managed health care plan. Congress then asked DoD to come up with a new system.

"There was a concern that we develop consistency across-the- board in our pharmacy programs," said Mary Gerwin, deputy assistant secretary of defense for health program integration and senior adviser to the defense health chief.

For example, if patients get their prescriptions filled at military treatment facilities or by mail order, it costs the system less because DoD has access to Federal Ceiling Prices with the drug manufacturers, Gerwin said. "Whereas, if beneficiaries get their drugs at the retail level, it could cost the Military Health System 24 percent to 70 percent more for the exact same drugs."

The problem is further compounded by the lack of standard, system-wide drug availability or formularies. "A drug available at one military treatment facility isn't necessarily carried at another one," she said.

"We've asked Congress for a uniform formulary. These are 'preferred drugs.' Let's say you've got a medication for heart disease, and several drugs provide the same benefits. We want all our pharmacies to carry at least one of those preferred drugs."

Even a preferred drug could lose its effectiveness and potentially cause harm if it interacts with another medication. Since the information systems that control military pharmacies don't directly communicate, patients may get prescription drugs from multiple sources that could cause health risks when they interact, Gerwin said.

"Under the current system, we have no way of knowing if a safety factor is involved, but the new computer system provides a database that consolidates information from different points of service and targets those drug interactions."

For patient convenience and to reduce DoD program costs, the new system also encourages use of the department's mail order pharmacy instead of getting drugs through retail pharmacies. Although current usage of the mail order system is below 10 percent, Gerwin said patients who do get their drugs through the mail like it. She added that the Department is able to obtain drugs at the Federal Ceiling Pricing for prescriptions filled via NMOP. National Mail Order Pharmacy details are available at TRICARE Service Centers, military treatment facilities and on the TRICARE Web site (http://www.tricare.osd.mil/).

Beneficiary cost has played a significant role in redesigning the pharmacy system, Gerwin said. "We want to make sure this doesn't end up with additional out-of-pocket costs to beneficiaries," she said. "Although there are co-pays for use of the mail order pharmacy [$4 for active duty family members, $8 for retirees], prescriptions are and will continue to be filled free of charge at military treatment facilities."

Included in the redesigned benefit is a pilot program for Medicare-eligible beneficiaries over the age of 65. Currently, they can get their prescriptions filled only at military pharmacies on a space-available basis or at base closure sites where they were given special access to the TRICARE Pharmacy Retail Networks and the National Mail Order Pharmacy program.

"We will randomly select two sites for the pilot that, by law, can't be near military treatment facilities," Gerwin said. "We expect the demonstration to begin early next year and last three years." Details of this demonstration are now being finalized.

DoD modeled the new pharmacy design on the best business practices of private sector health plans. "We looked at both fee-for-service and managed care systems to see what they are doing," Gerwin said. "We had to eliminate some of the best business practices used by private health care systems because they would unreasonably increase out-of-pocket costs for beneficiaries. The department wants to avoid increasing the costs that service members and their families have to pay for their prescription drugs."

Gerwin said the plan could have saved the government more money by charging for prescriptions filled at military pharmacies. "In the civilian sector, it's unheard of to get drugs free from a hospital pharmacy," she said. "But we believe that's a core part of the benefit we don't want to disrupt. So we didn't go for any changes in the co-pay for drugs obtained at a military hospital pharmacy.

"I think this redesign measures up to the standards of good patient care," she said. "From the managed care standpoint, it will help control costs and maintain high quality."

More information about military pharmacy benefits can be found in the TRICARE Handbook given enrollees in TRICARE Prime and on the Internet at http://www.tricare.osd.mil/.