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Defense officials are weighing new initiatives to limit access to the Tricare retail drug network, particularly for older beneficiaries who are using neighborhood drug outlets to get their maintenance medications.

Proposals under review, some of which require congressional action to implement, were discussed Feb. 6 at the second public meeting of the Task Force on the Future of Military Healthcare.

The Department of Defense wants help from the task force to drive a larger proportion of 6.7 million Tricare pharmacy users into the mail order program, which is far more efficient. Prescriptions filled by retail outlets cost Tricare about 40 percent more than drugs obtained by mail.

After a yearlong marketing campaign, the number of beneficiaries using mail order rose by only 11 percent, a figure that disappointed officials. Meanwhile, users relying solely on the retail network, with its 59,000 pharmacy outlets, climbed by 170,000 in 2006.

Retail costs are $4.4 billion, or 63 percent of the DOD pharmacy budget. Retail outlets, however, fill only 35 percent of all prescriptions. Mail order costs are $740 million, or 12 percent of the budget, and handle 14 percent of pharmacy workload.

Rear Adm. Thomas McGinnis, chief of Tricare pharmaceutical operations, told the task force that co-pays for the retail network are too low to drive beneficiaries into the mail order option to help control costs. Of four initiatives McGinnis asked the task force to study and perhaps endorse, two would block beneficiaries who need maintenance drugs for chronic conditions from filling their prescriptions in the retail network.

Maintenance drugs are medicines, McGinnis said, that patients likely will need for the rest of their lives. For that reason, they are seen as ideal for supplying to patients by mail order. Yet beneficiaries have been reluctant to make the shift from the retail network or even from base pharmacies that remain overworked, McGinnis said.

The initiatives he presented:

1) Require that all “third tier” maintenance medications, those not on the department’s uniform formulary of approved drugs, be available only by mail order, not in retail outlets. This could take effect with a change in regulation, though Congress also could block such a move. McGinnis said this change would save Tricare at least $50 million a year.

2) Require that all other maintenance drugs, which means generic and brand-name drugs on the formulary, be available only by mail order or at base pharmacies, ending their availability in the retail network. This move would require a change in law. It would save Tricare at least $185 million a year, said McGinnis.

3) Revise retail and mail order co-payments. As proposed last year, retail co-payments for generic drugs would rise to $5 from $3. The co-pay for brand name drugs on the uniform formulary would climb to $15, from $9. The big change from last year’s proposal might be to end the availability of nonformulary drugs in the retail network. The number of such drugs is 56 and climbing. This would end the need for that “third tier” co-pay of $22.

Regarding mail order co-pays, as proposed last year officials want the $3 charge for generic drugs reduced to zero. But the co-pay for a 90-day supply of a brand name drug on the formulary would rise to $15, from $9. The big change on mail order co-pays from last year also targets nonformulary drugs. McGinnis suggested the current co-pay of $22 could be replaced with 20 percent of the cost of the drug. For example, a nonformulary mail-order drug that costs Tricare $20 would have a $4 co-payment. A drug that costs Tricare $400 could have a co-pay of $80.

McGinnis reminded the task force that by definition costly nonformulary drugs have an equally effective alternative on the formulary so only patients who insist on using a nonformulary drug would pay the higher co-pays. Such co-pays would be waived for medical necessity.

McGinnis, a public health service officer, noted that government civilian employees enrolled in the Federal Health Benefits Program (FEHBP) face significantly higher drug co-pays than the military. For retail drugs, civilian employees pay 25 percent of the cost of the drug.

4) Selected over-the-counter medicines could be made a part of the uniform formulary and dispensed for free from all Tricare points of service. The idea here would be for Tricare to absorb the relatively small additional cost of dispensing nonprescription medicines in place of more costly prescription drugs. The example McGinnis used is the over-the-counter medicine Prilosec, for acid reflux, versus Nexium, a heavily marketed drug for the same condition but which is far more costly.

No task force member challenged the proposals. But the two co-chairman did question the wisdom of last year’s marketing campaign to try to persuade more beneficiaries to use mail order based on their own savings.

Gen. John D.W. Corley, Air Force vice chief of staff, suggested that service people need to be told that pharmacy costs are skyrocketing and choosing mail order over retail is both the smart and right thing to do.

“These are a series of great Americans who are making a choice [and] might be making another choice if they were better informed,” said Corley.

Co-chair Gail Wilensky, with the Institute of Medicine, said perhaps beneficiaries need to be warned more bluntly that their drug benefit is at risk if they don’t make better choices for themselves and the government.

Perhaps they should be told “flat out,” Wilensky said, “that this is what will allow us to keep your benefit — and you can help us a whole lot more than you’ve been doing.” Mail order usage, she said, “is pretty pitiful.”

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


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