Military update: Campaign targets mail-order drug usage

By Tom Phllpott:

Last year, only 6 percent of 6.6 million military beneficiaries with prescriptions to fill used the low-cost TRICARE Mail Order Program. By contrast, 51 percent had at least one prescription filled through TRICARE’s more costly retail network.

The rising popularity of the retail drug benefit versus near “flat line” usage of mail order means that many thousands of beneficiaries pay more than necessary for medicines, said Capt. Thomas J. McGinnis, chief of TRICARE’s new Pharmaceutical Operations Directorate.
It also means the Defense Department pays many millions of dollars more than it should for drugs. Every prescription filled in TRICARE retail outlets, which reached 50 million last year, costs the government 30 to 40 percent more than prescriptions filled by mail order.

McGinnis is leading the first campaign by TRICARE to raise mail order usage. It will begin with an effort to educate beneficiaries on the convenience and cost-savings of prescriptions filled by mail. Then as early as October, unless Congress intercedes, TRICARE will restructure pharmacy co-payments so mail order usage becomes more attractive, and retail less so.

With military pharmacy costs nearing $6 billion a year, TRICARE leaders last December elevated pharmacy operations to directorate level and appointed McGinnis its first chief. A Public Health Service officer, McGinnis spent his first 28 years in uniform with the Food and Drug Administration. His last assignment was as FDA’s director of pharmacy affairs.

“Prescription drug costs are our biggest worry,” he said in a phone interview to discuss his new job. Expanding the use of mail order is his first priority. From April 2001 through September 2005, the number of prescriptions for military beneficiaries filled by mail rose by 30 percent while the number filled in the TRICARE retail network jump by 250 percent.

“We want to drive some of our beneficiaries from that retail market place to the mail order,” McGinnis said.

First, he said, beneficiaries need to understand that mail order users already save 66 percent on co-payments because prescriptions filled by mail provide a 90-day supply versus 30 days in the retail network.
Second, the government saves on each prescription not filled in the retail network. The reason is that drug stocks on base and for mail order are purchased at federally negotiated price discounts. Drug manufacturers argue that federal pricing doesn’t apply to the TRICARE retail network because drugs aren’t dispensed there by government pharmacists.

A third factor to consider, said McGinnis, is the convenience of mail order. Patients avoid the cost of traveling to a retail outlet or a military base. They also avoid the hassles of base security checkpoints, of finding parking in crowded lots, and of long lines to get their medicines.
“For small co-pays, they get home delivery,” McGinnis said.

Generic drugs also lower costs. TRICARE has a mandatory generic substitution policy. Any prescription for a brand name drugs must be filled by generic medicine of identical ingredients and strength, if available.

TRICARE officials hope to use a change in co-payments not only to encourage more beneficiaries to use mail order but also generic drugs. The plan would end the $3 co-payment on mail order generics. At the same time, co-pay for the retail network would rise from $3 up to $5 for generic and from $9 up to $15 for brand name drugs.

Sydney Hickey, a health benefits expert with the National Military Family Association (NMFA), said an aggressive educational effort on the mail order program is welcomed and long overdue.

“We have been after the department for years to do it,” Hickey said. She added, “They have wasted a great deal of money.”

Tom Philpott can be contacted at Military Update, P.O. Box 231111, Centreville, Va. 20120-1111, or by e-mail at: