Lawmakers seek to solve Tricare Rx drug dispute

A fight over how much members of the military and their families pay for their prescription drugs is pitting the Pentagon and the pharmacies against the drug industry, while members of Congress attempt to resolve the controversial issue.

The debate comes at a time when the cash-strapped Pentagon is trying to reduce its growing prescription drug costs.

Even though Pentagon officials have asked Congress for help earlier this year, they stopped short of offering up a specific proposal, according to a congressional source. And now the plans that have emerged from the Senate and House armed services committees are headed on a collision course.

The issue will likely have to be solved at the Big Four level (the chairmen and ranking members of the armed services committees), but leadership officials could play a role, according to the congressional source. 

The Department of Defense in the past six years has had to contend with the rising cost of drugs sold by the drug stores as part of the military’s healthcare system, Tricare. 

Some manufacturers of brand-name drugs have declined to give discounts for medicine sold in drug stores, even though critics argue that the so-called 1992 Veterans Healthcare Act extends the discounts to retail pharmacies for the Department of Defense, Veterans Administration, the Coast Guard and the Public Health Service. The manufacturers allow discounts for medication sold by mail order.

Lawyers for the Department of Defense and the Veterans Administration are at odds with big pharmaceutical companies, which last year filed a lawsuit in the U.S. Federal Court of Appeals arguing that the rebates do not apply to the retail program under Tricare. 

Without a legislative proposal from the Pentagon, congressional defense authorizers stepped in with their solutions to ease the costs. The Senate passed legislation that would mandate the use of mail order for those in the Tricare system.

The Senate version of the 2007 defense authorization bill also seeks to clarify the 1992 Veterans Healthcare Act to make sure that discounts are extended to retail pharmacies and not only to the mail-order providers.

A similar provision failed to make it into the House Armed Services Committee bill.

The House authorizers, meanwhile, sought to get rid of co-payments on drugs ordered by mail and raised the co-payments for those picked up at a drug store.

When Rep. Ike Skelton (D-Mo,), the ranking member of the armed services panel, tried to offer an amendment to reimburse individuals for the increased cost share of their prescriptions filled at retail pharmacies — a counter-move to the measures adopted in the bill — the House Rules Committee did not allow him a vote.

The move frustrated Skelton, who praised an otherwise bipartisan bill. But Democrats are not giving up. Forty Democrats wrote to the House Armed Services Committee to urge Chairman Duncan Hunter (R-Calif.) and Skelton not to include the Senate measure mandating mail order of drugs in the conference report. 

That measure would “effectively remove access to local pharmacies,” the Democrats wrote. “Reducing costs by cutting off access to the local retail pharmacy is a drastic and unreasonable measure, especially when there is a more fair, feasible and effective option that will save money.”

The letter released by Reps. Marion Berry (D-Ark.) and Ben Cardin (D-Md.) also states that most drug manufacturers refused to follow the Veterans Healthcare Act. 

Pharmaceutical Research and Manufacturers of America (PhRMA) reacted to the letter by firing back.

“The Dear Colleague letter released by Reps. Cardin and Berry requesting [that] price control language be included in the final Defense Authorization bill is not only erroneous and misleading, it also misstates current law,” PhRMA said in a statement. “If the proposed language only clarified existing law as the letter suggests, rather than changing existing law to set government price controls, it would not be necessary.”

PhRMA said the lawmakers erred when suggesting that the 1992 act imposes price control on all medicines for those in the Tricare network. PhRMA said it wants to continue the dialogue on how the Pentagon can achieve savings.

The National Association of Chain Drug Stores (NACDS) and the National Community Pharmacists Association (NCPA) have been lobbying Congress and the Pentagon to try and get rid of the mail-order provision.

“The critical issue in this debate is choice for military family,” said Julie Khani, director of federal healthcare programs at NACDS. “We really are on the sides of military family, they should be able to choose where they receive their prescription medication.” She added that the Pentagon should have the same negotiating power over medicine sold in drug stores as they do for those sold by mail order.

Meanwhile, the Pharmaceutical Care Management Association, which represents pharmacy benefit managers, hailed the Senate mail-order provision as an important step forward in trying to lower the cost of prescriptions for Tricare beneficiaries.

“Mail-service pharmacies provide deeper discounts than retail pharmacies on maintenance medications for the chronically ill, improve safety and compliance and have the convenience of home delivery,” the association’s president, Mark Merritt, said in a statement.

The Congressional Budget Office estimated that the Pentagon could save $1.5 billion from 2007 to 2016 if the mail-order-pharmacy option was signed into law.