Prevent Dramatic TRICARE Pharmacy Copay Hikes

Issue: Unless Congress acts to stop them, the Defense Department is planning to double and triple pharmacy copays for military beneficiaries.

Background: The Senate Armed Services Committee version of the FY2013 Defense Authorization Bill (S.3254) is silent on this issue.Since current law gives the Secretary of Defense authority to set pharmacy copays, the Senate bill would tacitly accept the Pentagon-proposed plan to more than double the copays this year, and triple them over the next five years.

Thereason for the inaction was the Committee’s inability to identify a mandatory spending offset to reduce the copays (funds spent on beneficiaries age 65+ are mandatory spending).

But House leaders thought the Pentagon-proposed copay increases were so inappropriate that theyincluded an alternative plan in the House defense bill (H.R. 4310) that did three things:

  • It substantially reduced the Pentagon-proposed copay increases for FY2013
  • It put a statutory cap on any increases after FY2013, tying future annual copay increases to the percentage increase in military retired pay
  • To pay for these more moderate increases, it established a five-year pilot program that would require TFL beneficiaries to use the mail-order system for at least one year to refill any maintenance medications (waivers would be allowed under certain hardship or other conditions); after one year, beneficiaries could opt out of mail-order participation

While MOAA is no fan of mandatory mail-order use, our survey of 7,000 respondents showed a resounding 97% preferred theHouse plan, with its significantly smaller copay hikes in exchange for a mandatory one-year trial of the mail order pharmacy for TFL-eligibles.

The attached chart contrasts how copays would change over the next 5 years under the House proposal vs. the DoD/Senate plan.

In passing its alternative copay plan, the House bill also recognized DoD leaders claims of excessively rising health costs are belied by the Pentagon’s reprogramming of nearly $3 billion in unspent funds from the Defense Health Program over the last three years.

Recommendation:

-Support/sponsora Senate defense authorization bill amendment to insertthe House-passed provision

-Sustain the House-passed provision in the final defense authorization bill.

DoD/Senate vs House-Passed Rx Copays

Retail Medicationss

FY12 / FY13 / FY14* / FY15* / FY16* / FY17*
Generic
DoD/Senate
House / $5 / $5
$5 / $6
$5.15 / $7
$5.30 / $8
$5.46 / $9
$5.62
Brand
DoD/Senate
House / $12 / $26
$17 / $28 $17.51 / $30
$18.04 / $32
$18.58 / $34
$19.14
Non-Formulary
DoD/Senate
House / $25 / **
$44 / **
$45.32 / **
$46.68 / **
$48.08 / **
$49.52

Mail-Order Medications

FY12 / FY13 / FY14* / FY15* / FY16* / FY17*
Generic
DoD/Senate
House / 0 / 0
0 / 0
0 / 0
0 / 0
0 / $9
0
Brand
DoD/Senate
House / $9 / $26
$13 / $28
$13.39 / $30
$13.79 / $32
$14.20 / $34
$14.63
Non-Formulary
DoD/Senate
House / $25 / $51
$43 / $54
$44.29 / $58
$45.62 / $62
$46.99 / $66
$48.40

*Assumes 3% annual COLAs

** Non-formulary medications wouldn’t be available in retail pharmacies under DoD/Senate plan

The bottom line -- compared to the DoD/Senate plan, the House-passed plan would:

  • Cut retail copays by about 40% below the DoD plan
  • Keep access to non-formulary meds in retail stores
  • Cut mail-order copays by more than 50% for brand-name meds
  • Cut mail-order copays by 25% for non-formulary meds
  • Keep mail-order copays at zero for generic meds