TRICARE ‘buy-laws’ could be boon for Rx

WASHINGTON —The deadline for telling Uncle Sam how the TRICARE military health program should spend its prescription dollars is fast approaching.

Passage early this year of the National Defense Authorization Act for Fiscal Year 2008 handed retail pharmacy a victory by preserving freedom of choice for military members and their families about where they have their prescriptions filled and leaving the door open for community pharmacies to participate in a market worth billions of dollars.

The law could also make it easier for retail pharmacies to compete for the military prescription market by making it cheaper for the Department of Defense to buy drugs dispensed at retail. But retail pharmacy advocates and other interested parties have only until Sept. 23 to comment on the purchasing provisions of the law.

Comments can be submitted to the Federal eRulemaking Portal at www.regulations.gov. (For more information, contact Captain William Blanche of TRICARE at 703-681-2890.)

President Bush signed the military spending bill Jan. 28, culminating months of lobbying by pharmacy leaders on behalf of a level playing field between retail and mail order pharmacies.

The bill freezes retail pharmacy co-payments at current levels. Perhaps its most far-reaching provision, however, is that it clearly gives the Department of Defense the power to negotiate with drug manufacturers for federal pricing discounts for TRICARE prescriptions filled at retail pharmacies. Those are the same discounts already available for TRICARE scripts filled by mail-order pharmacies or at military base pharmacies.

“With respect to any prescription filled on or after the date of enactment…the TRICARE retail pharmacy program shall be treated as an element of the Department of Defense for purposes of procurement of drugs by federal agencies,” noted the government in the Federal Register. “Pharmaceuticals paid for by the Department of Defense that are provided by network retail pharmacies…are subject to the [same] pricing standards.”

Juli Khani, director of federal government affairs for NACDS, explained the bill’s impact. “There are three places where TRICARE beneficiaries can obtain prescription drugs: mail order, the pharmacies on the military bases and retail pharmacies,” she told Drug Store News. “Historically, drug manufacturers have provided very significant discounts for scripts when they’re dispensed by the base pharmacies or by mail order.”

“There was no real justification for why the discounts were not being provided [to retail prescriptions],” she said. “But, in fact, they weren’t.”

Indeed, the Bush administration quietly shelved direct price negotiations for retail-bound military prescription drugs in the face of intense opposition from the branded drug industry, according to a report in Stars and Stripes, the military newspaper. And in response to the new military spending bill price-discounting provision, which was written to be retroactive to its enactment early this year, the Pharmaceutical Research and Manufacturers of America, the industry’s chief trade group, has filed a lawsuit that has yet to be resolved in court.

Despite that opposition, the government predicted that its pharmacy costs for TRICARE’s 9 million beneficiaries will be cut by more than $700 million next year by extending price discounts to retail-bound drugs. Those savings could be even higher as manufacturers offer financial incentives to keep their drugs on the retail formulary wielded by Express Scripts, the PBM that administers the program.

“The principle economic impact of this proposed rule is to moderate somewhat the rate of growth in the retail pharmacy component of the program,” noted the Federal Register.

“This is real money we’re talking about,” said Khani.

NACDS and other retail pharmacy advocates are hoping that the reduction in drug costs serves as a back-door way of further leveling the playing field between mail order and retail pharmacies that serve military families. “The reason why we’ve fought so aggressively is to allow beneficiaries to continue to make their choice,” Khani noted. “If you have a leveling of the playing field, and if the Department of Defense can obtain discounts for prescriptions regardless of where they’re dispensed, it really ends any incentive to drive beneficiaries to one outlet over the other.

“From the standpoint of NACDS membership, we’re in this fight so TRICARE beneficiaries can continue to choose freely where they want to obtain their prescription drugs and pharmacy services,” Khani added. “Overwhelmingly thus far, they’ve chosen retail pharmacies. Despite the fact that there have been incentives to use mail order, TRICARE beneficiaries nevertheless continue to prefer retail pharmacies to obtain prescription drugs and services.”