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Changes to DOD’s Pharmacy Program Likely to Save More than $1 Billion

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By Debbie Gregory.

Thanks to higher beneficiary co-pays, tighter point-of-service rules and recent streamlining of prescription drug processes across the military, the Department of Defense pharmacy program may be able to reduce the cost of prescriptions by more than $1 billion in the five year period between 2014 and 2019.

Policy changes have forced or enticed beneficiaries to skip retail outlets and use mail order for refills on maintenance drugs used for chronic conditions. Additionally, base pharmacies, where drugs are still dispensed at no charge, have expanded the drugs they stock to better meet beneficiaries’ medication needs.

Despite a couple of co-pay increases the past five years to encourage beneficiaries to use generic medicines and more cost-efficient drug outlets, the average annual out-of-pocket cost per beneficiary has ranged from $553 to $603.

Beneficiaries who want brand name maintenance drugs can do so via home delivery or on base. But if they opt for a retail pharmacy, they have to pay the full cost.

Express Scripts, the TRICARE contracted mail order pharmacy, has been a major component in the success of the program.

Of 9.4 million beneficiaries eligible to the use the pharmacy benefit, 82 percent did so in fiscal 2016. That was up from 66 percent in 2002, before the TRICARE mail order program began. A total of 7.7 million beneficiaries got at least one prescription filled in 2016, two million more than in 2002. Prescriptions filled across all three points of service totaled 127 million in 2016 versus 82 million in 2002, a 55 percent jump.

Almost 60 percent of beneficiaries are retirees or their family members: 3.1 million (33.2 percent) are retirees 65 and older and their dependents; 2.2 million (23.7 percent) are younger retirees and their family members. About 1.5 million beneficiaries (16.4 percent) are active duty and two million (21.4 percent) are family members of active duty.

The remaining half million “other” beneficiaries are mostly Reserve, Guard and their family members who qualify for the drug benefit.

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