Points of Interest: A New Prescription Drug Benefit

By Tom Philpott

The solution that the GAO proposes is full integration of what now are three separate benefits: no-cost drugs from base pharmacies; a retail pharmacy benefit managed by TRICARE contractors, and a national mail-order service run under separate contract. The system is so fractured, the GAO said, that officials cannot track or control costs, cannot monitor the drugs that patients take or doctors prescribe, and cannot adopt sound business practices used by commercial pharmacies.

In an era of information networks, the military still keeps separate pharmacy data bases for its 587 military treatment facilities, its half-dozen regional TRICARE contractors, and its national mail-order pharmacy plan. No one monitors what amounts or combination of drugs beneficiaries draw from the different sources. This invites abuse and endangers patients, the GAO said.

Defense officials and TRICARE contractors concurred. They estimated that 10% of hospitalizations, emergency room and doctor visits stem from "inappropriate drug therapy," said GAO. "This means . . . about $83 million in [military] hospitalization expenses may be preventable. More important, patient safety is in jeopardy."

The GAO gave several examples of the abuse. Here are two:

  • Over 15 months, a young Air Force patient's mother obtained 260 prescriptions for asthma drugs and inhalers, enough to last five years. She used various base and clinic pharmacies which had no way to check on previous prescriptions. The woman's aggressive behavior toward pharmacy staff finally sparked an investigation. Otherwise, her stockpiling of drugs would have gone undetected.
  • Over a ten-week period, a sickle cell anemia patient at an Army base obtained 14 prescriptions from several civilian and two military doctors, for a potentially addictive, narcotic painkiller. The prescriptions were filled at an Army medical center, a Navy hospital, and several TRICARE retail pharmacies. The abuse was only uncovered "by happenstance," the GAO said.

More problems are created by allowing each base pharmacy to set its own formulary to stay within budget. In 1996, the Pensacola naval hospital decided to keep Zyrtec, a new allergy drug for upper respiratory distress, off the formulary for medications available at no charge to dependents and retirees. While, therapeutically, Zyrtec was seen as more effective than other like drugs on the formulary, high demand for it among other Navy pharmacies convinced Pensacola not to list it, the GAO said.

The Lackland Air Force medical center in San Antonio dropped the popular allergy medication Allegra from its formulary in 1997 and made it available only to pilots. At Sheppard Air Force hospital in Wichita Falls, Texas, the pharmacy dropped Zocor, a cholesterol-lowering drug, to save an estimated $98,000 that year. Patients were switched to cheaper medication.

Such decisions anger and frustrate patients and can drive up system-wide costs, the GAO said. Denying needed drugs can lead to illness and more costly treatments. Also, many patients just drive to a larger military pharmacy or turn to retail drug plans, thus sticking TRICARE contractors with higher than expected costs. Perhaps concerned about having to renegotiate those contracts, Defense officials have not acknowledged a cost shifting problem. But the GAO suggested the evidence is in Defense Department's own studies. From 1995 through 1997, military pharmacy usage fell 5%, contractors' retail pharmacy claims "surged by 43%," the GAO said.

Only active-duty members would be exempt from base pharmacy co-payments under the GAO plan. But beneficiaries age 65 and older could see their overall drug benefit enhanced; the report recommends extending to the elderly the same retail and mail-order pharmacy plans now available to under 65 beneficiaries. It is time, said the GAO, to close a "major gap" in their health care coverage. The cost of closing that gap could be covered by other reform savings. A single, system-wide formulary, for example, could save $107 million a year, the GAO said.

The introduction of co-payments is sure to be perceived as erosion of benefits, Defense officials warned auditors. But the GAO said military patients already are seeing their drug benefit erode as base pharmacies sharply limit the kinds of medicines they stock in order to hold down costs. That trend not only harms patient care but shifts pharmacy costs to other base pharmacies or to TRICARE contractors. And in the end, the GAO said, the Defense Department picks up the tab.

Both the GAO and Defense officials believe co-payments on military outpatient prescriptions would cut costs and curb abuse but how to impose them has not been decided. Fees might be set only for more expensive medications, dispensing at no charge lower-cost substitutes. A $16 co-payment on non-formulary drugs would save $60 million a year, GAO said.

Gary A. Christopherson, the number-two Defense health official, told the GAO that he "concurs with the report and its recommendations." The Defense Department will seek authority to collect co-payments at pharmacies, he said, and to extend the full range of drug benefits to Medicare-eligible beneficiaries.


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