Pharmacy Use and Costs in Employer-Provided Health Plans: Insights for TRICARE Benefit Design from the Private Sector
Feb 8, 2005
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Recent growth is the military health system (MHS) is partly attributable to the TRICARE Senior Pharmacy (TSRx) program, which expanded pharmacy coverage for elderly MHS beneficiaries. In principle, the Department of Defense (DoD) can reduce its pharmacy acquisition costs by shifting prescribing from retail pharmacies to MTF pharmacies and/or the TRICARE mail order pharmacy. To help develop policy options that can improve DoD’s ability to manage acquisition costs of the TSRx program, this study provides information about where TSRx beneficiaries receive their medications and what factors influence where they choose to obtain their medications. Among the findings: (1) Although a majority of TSRx prescriptions in FY02 were dispensed from MTF pharmacies, a majority of TSRx estimated ingredient costs were attributable to drugs dispensed from retail pharmacies. (2) Estimated ingredient costs could be reduced if dispensing shifted from retail pharmacies to dispensing locations where federal pricing is the basis of DoD’s ingredient cost. (3) Geographic proximity to MTFs was strongly associated with TSRx use and utilization patterns. (4) Within two major therapeutic classes-antihyperlipidemics and gastrointestinals-the availability of a drug at a MTF was associated with increased use of the MTF and reduced use of retail pharmacies to fill other prescriptions.