Curbing Prescription Drug Spending

A new report from the Government Accountability Office supports the Defense Department’s ongoing efforts to curb soaring prescription drug costs, including a plan to up copayments at retail pharmacies to encourage more beneficiaries to use military pharmacies or Tricare’s Mail Order Pharmacy program. According to the GAO report, DOD spending on drugs “more than tripled” from Fiscal 2000 at $1.6 billion to 6.2 billion in Fiscal 2006 and most of that increase came from retail pharmacy spending. In 2000, the retail pharmacy share was about 29 percent, but in 2006, it rose to 63 percent as more and more beneficiaries opted to use retail services. GAO noted that part of the growth in spending during that period could have been avoided had DOD applied “federal pricing arrangements” that normally result in lower prices to retail purchases as it did for MTFs and TMOP. In the Fiscal 2008 defense authorization act, Congress stipulated that DOD should apply the FPAs to retail purchases, as well. DOD also intends to pursue increasing copayments at retail pharmacies, although Congress prohibited such a move through Fiscal 2008.