August 8, 2016

U.S. Senate
Washington, D.C. 20510

U.S. House of Representatives
Washington, D.C. 20515

Dear Conferee, 

You will soon be reconciling the House and Senate versions of the National Defense Authorization Act (NDAA) for Fiscal Year 2017.  On behalf of the more than 1.2 million members and supporters of the Council for Citizens Against Government Waste (CCAGW), I urge you to recede to the Senate position on Section 745 – Pilot Program for Prescription Drugs Acquisition Cost Parity in the TRICARE Pharmacy Benefits Program.  This provision, which appears only in the House-passed version of the bill, would raise prices for TRICARE beneficiaries and open the door to waste, fraud, abuse, and mismanagement by allowing retail pharmacies to access pharmaceuticals at federally discounted rates with no guarantee that the discounts would be passed on to beneficiaries.  

Currently, retired TRICARE beneficiaries can receive their pharmacy benefits through home delivery, at a military pharmacy, or at 57,000 TRICARE retail network pharmacies.  TRICARE strongly recommends that beneficiaries utilize home delivery because it saves patients out-of-pocket costs.  A July 24, 2013 Department of Defense (DOD) Inspector General (IG) report found that the prescriptions filled by mail order “cost 16.7 percent less than prescriptions obtained through retail pharmacies,” and beneficiaries’ satisfaction with the program averaged 96 percent between December 2009 and November 2012.

The IG also found that the mail order program was more cost efficient and effective relative to the retail pharmacy option.  The dispensing controls used in the mail order system, such as automation and pharmacist intervention, helped to ensure that beneficiaries received only the pharmaceuticals that they needed.  The IG noted that these controls helped prevent two million unnecessary prescriptions from being dispensed. 

The government currently replenishes TRICARE drug inventory based on strict protocols and oversight.  While Section 745 would allow TRICARE retail pharmacies to receive the same discounts provided by all DOD programs, it does not require the pharmacies to pass along the cost savings to non-Medicare eligible TRICARE patients.  Without robust oversight mechanisms in place, unscrupulous pharmacies could take advantage of the DOD discounted price while receiving full payment from a private-sector insurer or customer.

The pilot program would disrupt TRICARE’s successful mail order program, which saves patients and taxpayers money, while inviting fraudulent behavior. 

Again, I urge you to exclude the pilot program from the conference report.

Sincerely, 

Tom Schatz
President, CCAGW