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Every month about 400,000 users of the military’s retail pharmacy network, those who have other health insurance, have to file paper claims with Tricare to be reimbursed for co-payments and other costs incurred that their primary insurance won’t cover.

The paper hassle is about to end, said Navy Cmdr. Jill Pettit, a senior pharmacy official. Tricare is moving to “online coordination of benefits” for the retail pharmacy network “in the next couple of months,” she said.

A beneficiary using the retail network now, who has other health insurance, gives to the pharmacist “primary” insurance information. The pharmacist bills the primary carrier and quickly gets back information on what the beneficiary still owes in fees or co-payments.

But many retail network pharmacists do not go one more step and communicate online with Tricare. So, in most cases, the beneficiary is told to pay the balance and file a claim with Tricare for full reimbursement.

In response to complaints from beneficiaries and their advocates, Pettit said, much of 400,000 paper claims a month will soon end.

“We know this was something that our beneficiaries want,” Pettit said.

Rather than filing paper claims, beneficiaries will just wait a few moments in front of the pharmacist while the unpaid portion of the claim is reviewed online by Tricare and the secondary coverage allowed.

“We’re pretty excited about this because this is going to be a real patient satisfier,” Pettit said to an audience of medical personnel attending the annual Tricare conference in Washington on Feb. 1.

Higher fees stem costsFacing a jump to $22 in their co-payment for Viagra, almost 16,000 military beneficiaries being treated for erectile dysfunction last year decided to change medicine, and did so over just four months.

They switched to Levitra, the only erectile drug still on the military’s “uniform formulary.” As a brand-name drug on the formulary, Levitra’s co-payment is $9 whether obtained in the Tricare retail network or by mail-order. Also formulary prescriptions are filled for at a base pharmacy.

For Navy Cmdr. Mark A. Richerson, director of the Defense Department’s Pharmacoeconomic Center, patient behavior with this and other drug classes moved on the formulary show the powerful effect of raising co-payments. What we learned, he said, is that co-pays do change “market share. Patients will switch.”

That confirmation is important, Richerson suggested during the Tricare conference, because getting 6.6 million current users of the military pharmacy benefit to make more cost-effective choices is critical to department plans to lower the trajectory of soaring pharmacy costs.

In fiscal 2005, defense spending on outpatient pharmacy services hit $5.4 billion, up 80 percent in three years. But at least the rate of growth is trending down, Richerson noted. In fiscal 2003, outpatient drugs costs rose by 27.5 percent.

The increase was 21.8 percent in 2004 and 15.5 percent last year. And for the first time in recent memory, outpatient drug costs in military treatment facilities actually fell last year, by 5.2 percent or $89 million. But military retail pharmacy costs jumped 30.1 percent.

“It’s an incredibly expensive point-of-service,” said Richerson.

Congress took a first important step toward controlling pharmacy costs in 2000 when it directed the department to create a uniform formulary, across the three points-of-service for military medicine: base pharmacies, mail order and a network of retail pharmacies.

The law directed the department to set three distinct co-payment levels — $3 for generic drugs, $9 for brand-name drugs on the formulary and a third tier of $22 for nonformulary drugs. The department’s Pharmacy and Therapeutics (P&T) Committee has been reviewing several drug classes every three months, recommending what medicines should be moved to non-formulary status.

Last July, it recommended keeping only Levitra on the formulary, finding it as effective but cheaper than Viagra or Cialis.

Richerson called the formulary review process, which can last as long as 14 months from preliminary review to implementing final decisions, “efficient, politically sound [and] very thorough.”

He also indicated that when beneficiaries respond to higher co-pays, and change their medicines, it also signals pharmaceutical companies to lower drug prices or risk seeing other drugs fall from the formulary.

From the time the Levitra decision was announced last July to early December last year, the department’s cost per tablet to treat erectile dysfunction fell by more than a dollar.

Besides moving to a uniform formulary to trim costs, Defense officials are said to be weighing changes in co-payment levels, perhaps adding a tier for special high-priced drugs, lowering or removing the $3 charge for generic drugs and raising co-payments on prescriptions filled in the Tricare retail network, a far more costly alternative for the government than mail order. Another idea being considered would require base pharmacy users to have their prescriptions refilled via the Tricare mail order program.

To comment, write Military Update, P.O. Box 231111, Centreville, VA, 20120-1111, e-mail or visit


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