Proposal touts pharmacy savings

The biggest knife for slicing TRICARE costs off future defense budgets is not new and higher enrollment fees or deductibles proposed for retirees and their families who use one of the military’s health insurance options of TRICARE Prime, Standard, Extra or, for the elderly, TRICARE for Life.

Those phased increases, as detailed here last week, would save a total of $23 billion over 10 years, mostly by sticking retirees with higher costs.

But even more dollars — $28 billion over 10 years — would be saved in TRICARE pharmacy costs alone under a separate proposed plan to revise co-payments for prescriptions filled at retail outlets and through mail order.

These changes might be more palatable to beneficiaries because a lot of the drug dollars saved would come out of the pockets of drug manufacturers and retailers. Beneficiaries still would be hit but the hardest impact would be felt by those unable or unwilling to shift their prescriptions from retail outlets to the more efficient choice of mail order, or to base pharmacies where drugs will continue to be dispensed free of charge.

“Driving (them) to the lowest cost-point venues — military pharmacies and home delivery — and increasing their use of generic drugs are the two overarching goals” of revising the co-payment structure, explained Rear Adm. Thomas J. McGinnis, chief of pharmaceutical operations for TRICARE.

Congress must pass legislation to raise TRICARE enrollment fees and deductibles under TRICARE insurance plans. But Defense officials already have authority to raise drug co-pays in the retail network and at mail order. Lawmakers only need to get out of the way, as they did last year, when the first modest changes occurred to co-pays at retail and mail order in 10 years.

McGinnis said Congress didn’t interfere most likely because the Oct. 1 co-pay changes included removing a $3 charge on generic drugs at mail order. Military associations had lobbied for that for several years, McGinnis said, so their protests were muted on raising co-pays at retail from $3 to $5 for generic drugs, and from $9 to $12 for brand name drugs.

Unless Congress intervenes this year, however, co-pay increases for brand name drugs at retail will not be modest this October. Retirees, their families and active duty family members would begin paying $26 per drug for brand names at their local pharmacies, up from $12. The co-pay thereafter would climb by $2 more each year until reaching $34 in October 2016. After that, co-pays would be adjusted yearly based on overall medical inflation.

Co-pays for brand name drugs at mail order also would jump to $26 from $9, for a 90-day supply, and then climb slowly to $34 by October 2016.

The intent, said McGinnis, is “to gradually increase these co-pays to a more realistic level” after a decade of no change before last year’s increases. Through the war years, drug expenditures rose dramatically at retail outlets, the most costly venue for TRICARE. In 2002, prescriptions filled at retail cost $1.28 billion, less than half of annual drug expenditures of $3 billion. By 2009, retail drug costs for TRICARE had almost quadrupled, to $4.76 billion, equally to two thirds of total annual pharmacy cost of $7.24 billion.

Rep. Joe Wilson, R-S.C., chairman of the armed services personnel subcommittee, told me he will oppose any plan to raise TRICARE drug co-pays, regardless of projected savings in shifting away from retail outlets.

Also opposing these changes for their members who stand to lose a lot business are the National Association of Chain Drug Stores and the National Community Pharmacists Association.