TRICARE Uniform Formulary
UNDERSTANDING THE PROCESS THAT IT TAKES TO DELIVER A DRUG TO A PATIENT IN THE TRICARE SYSTEM.
In 2003, the latest year for which data is available, health care spending in the United States reached $1.7 trillion. Within DoD, health care now exceeds $25 billion. Worldwide, TRICARE administers health care to approximately 9.2 million beneficiaries.
According to Dr. William J. Winkenwerder Jr., assistant secretary of defense for health affairs and director of the TRICARE Management Activity, sustaining this benefit and controlling costs is a challenge. Additionally, health spending is affecting other defense programs—many of which are important to national security. Nowhere is this balancing act more critical than in the management of the TRICARE pharmacy program.
Since 2001, TRICARE has increased its pharmacy budget 500 percent to more than $5 billion per year, Winkenwerder said in testimony before a House subcommittee. Looking to the future, TRICARE can capitalize on advances in pharmaceutical technologies and delivery systems to save money without adversely affecting the health of beneficiaries. Recently, DoD implemented a three-tier drug system and pharmaceutical review process to reduce costs and provide a first-class health care program.
THE UNIFORM FORMULARY
Implemented in July 2005, the TRICARE uniform formulary is the set of medications the DoD has approved for distribution by military clinics and hospitals. These same medications are covered by the TRICARE health plan at more than 55,000 commercial pharmacies across the nation. Covered medications include generic (tier one) and brand-name (tier two) medications. Whenever possible, DoD will prescribe generic drugs, unless a physician determines it medically necessary for a patient to receive the brand-name drug. All prescription drugs prescribed by the DoD medical system are FDA approved—whether they are generic or brand name.
Drugs that are not consistently available within the Military Health System are referred to as “nonformulary” (tier three). Beneficiaries pay copayments based on whether a medication is generic or brand name (tiers 1 or 2), or nonformulary (tier 3). In network retail pharmacies, beneficiaries can receive up to a 30-day supply of medication by paying $3 for generic drugs, $9 for brand-name drugs and $22 for nonformulary drugs. If they obtain the same drugs through the TRICARE Mail Order Pharmacy, the copayments are the same, but they receive up to triple the amount of the drug for a greater overall value. In non-network retail pharmacies, nonformulary drugs have a copayment of the higher of $22 or 20 percent of the cost of the drug. Beneficiaries pay nothing for formulary drugs obtained from a military treatment facility. Nonformulary drugs may be obtained at a military treatment facility only when medically necessary and only when the prescription is written by a provider at a military treatment facility.
THE UNIFORM FORMULARY REVIEW PROCESS
As mandated by federal law, all drugs prescribed by providers in the Military Health System must undergo a thorough review process before being placed in a tier on the military formulary. The DoD Pharmacy and Therapeutics Committee consists of physicians and pharmacists from the military services and the Veterans Administration. The committee evaluates and categorizes FDA-approved prescription drugs and recommends them for placement on the formulary. The committee members base their recommendations on an extensive analysis of FDA-approved prescription drugs, in which they review a drug’s clinical- and cost-effectiveness compared to other drugs in the same therapeutic class. Winkenwerder, who is boardcertified in internal medicine, makes the final decision about a medication’s status. The review process involves the following steps:
Drug Class Review – The Pharmacy and Therapeutics Committee, along with the DoD Pharmacoeconomic Center, considers how beneficiaries currently use a drug, its cost, existing purchase agreements and the likelihood of the drug becoming available as a generic in the near future, among other considerations. The drug classes under current review by the committee are listed on the following web site, www.tricare.osd. mil/pharmacy/PT_Cmte/default.htm.
Clinical Effectiveness Review – Once the Pharmacy and Therapeutics Committee selects a drug class to review, the Pharmacoeconomic Center begins a thorough clinical analysis of the safety, effectiveness and clinical outcomes of the drug under consideration. It reviews scientific literature and specialty organization guidelines, queries providers interested in that drug, and examines other available information. After the center presents its analysis, the committee determines its final recommendation.
Cost-Effectiveness Review – After the Pharmacy and Therapeutics Committee completes its relative clinical-effectiveness review, the Pharmacoeconomic Center evaluates the relative cost-effectiveness of the drugs, which may include such types of analyses as pharmacoeconomic, cost minimization, cost-effectiveness and budget impact.
At the committee meeting, Pharmacoeconomic Center subject-matter experts present the cost-effectiveness analysis. Only Pharmacy and Therapeutics Committee members vote to accept or reject results, and they do not always accept the center’s analysis.
Formulary Consideration and Implementation – Once the committee determines the relative clinical- and cost-effectiveness of a drug class, it recommends drugs to be categorized as either formulary or nonformulary. Sometimes the recommendations are surprising to those who believe the committee recommends only the least expensive drugs for formulary status. For example, the committee may recommend a drug that is much more expensive than comparable drugs be kept in the uniform formulary if it has no clinical equivalent. It may also recommend a drug for nonformulary status if there are other drugs that have similar clinical effectiveness. For example, esomeprazole (Nexium) has nonformulary status, because five other proton pump inhibitors have similar clinical effectiveness.
Sometimes a drug has documented effectiveness in a small segment of the beneficiary population, but no clinical advantage in the more typical patient. In this case, the committee may recommend nonformulary status. Some patients may need the drug out of medical necessity and may obtain it at the formulary cost share in a network pharmacy or in a military clinic or hospital.
FINAL DECISION AND IMPLEMENTATION
Regardless of the center’s findings, the Pharmacy and Therapeutics Committee sends its recommendations to the Beneficiary Advisory Panel for comment and to the director of TRICARE for a final decision. By law, the Beneficiary Advisory Panel must review and comment on development of the formulary. The panel’s membership includes representatives of active duty families and retirees, civilian health care professionals, and those supporting the health care benefit through contracts. The director of TMA must consider the Beneficiary Advisory Panel’s comments before making any changes to the formulary.
The Pharmacy and Therapeutics Committee then recommends an implementation period for nonformulary status drugs, which may be as little as one day or as long as 180 days.
BENEFICIARIES AND THE UNIFORM FORMULARY
Many civilian health care plans charge either significantly more for nonformulary drugs or make them unavailable altogether. By using formulary drugs where appropriate, providers and patients can support DoD pharmacy management and contain costs. The uniform formulary process ensures that TRICARE beneficiaries have an outstanding health benefit that mirrors. ♦