Pharmacoeconomic Center Conference January 8, 2007 RADM Tom McGinnis, U.S.P.H.S. Chief, DoD...
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Transcript of Pharmacoeconomic Center Conference January 8, 2007 RADM Tom McGinnis, U.S.P.H.S. Chief, DoD...
Pharmacoeconomic CenterConference
January 8, 2007
RADM Tom McGinnis, U.S.P.H.S.Chief, DoD Pharmaceutical Operations
Directorate
V5
Scope of DoD Pharmacy Benefit
• 9.2M Beneficiaries– 6.7M users of pharmacy benefit
• 115M prescriptions dispensed in FY06• 536 dispensing pharmacies across 3 military
services in 121 MTFs• 1 Nation-wide TRICARE Mail Order Pharmacy
(TMOP) • 58,650 retail pharmacies (TRRx) managed by
one PBM• Nation-wide Uniform Formulary
Key Points of Uniform Formulary
• All drugs on UF unless TMA Director approves DoD P&T recommendation of non-formulary (3rd Tier) Status
• Preserves access:
– Beneficiary access to all covered drugs• Encourages use of more cost-effective POS (Co-pays
and Amount Dispensed)• Influences beneficiary and provider choice• Preserves competitive market for best prices to gain
market share• Allows beneficiaries to obtain non-formulary drugs
that are “clinically necessary” at the 2nd Tier co-pay
Military Treatment Facility Pharmacy
• 536 Dispensing Pharmacies in 121 MTFs• Beneficiaries have access to prescriptions
without co-pay• Formulary composed of Basic Core Formulary
plus MTF specific additions• Least costly option to patient – no co-pays • Least costly point of service for DoD• 44% Rx workload performed at MTF• 25% of dollars spent*
*Does not include inpatient costs
TRICARE Mail Order Pharmacy
• TMOP Contract awarded to Express Scripts, Inc. (Sep 02)
• Services began 1 Mar 03 – contract expires 2007• Services via state-of-the-art facility in Tempe, AZ • Product replenishment through Prime Vendor
(McKesson) at Federal Pricing • Largest commercial mail order account within
industry• 7% of Rx workload performed at TMOP• 12% of dollars spent
TRICARE Retail Pharmacy
• Consolidated retail pharmacy services under a single contract to optimize benefit management
• Consistent benefit across all regions• Portability in 50 states, Guam, Puerto Rico, USVI,
American Samoa, Northern Mariana Islands• Pharmacy Help Desk Services 24 x 7 x 365• TRRx Dedicated Staff• 58,650 Retail Pharmacies Now Participate• 49% Rx workload performed at TRRx• 63% of total dollars spent
Unique Users - Point of Service- All Ages
Source: PDTS
Unique Users FY05 = 6.6M
FY06 = 6.7M
Retail46% 19% 28%
Mail Order
4%1%MTF
2%
1%
42% FY06 30% FY06
5%
Unique Users - Point of Service
Source: PDTS
Retail
MTF
Mail Order
Unique Users ≥ 65 = 1.5M
15%
36%25%13%
38%24%
1%
16%5%
1% 15%2%
54%
25%
2%
<1%
17%
<1%
1%
Mail OrderMTF
Unique Users < 65 = 5.2M
2%
<1% <1%
1%51%
18%
27%
Retail
Source: PDTS
72%
9,210,547
6,612,378
112,572
288,287
45,569
1,253,612
61,343
1,820,899
3,031,537
FY05
70%
9,154,440
6,390,103
101,110
256,927
42,791
1,104,689
64,605
1,500,504
3,319,477
FY04
73% 69%66%% of Eligible
Beneficiaries Using Pharmacy Benefit
9,177,5488,929,0718,671,727Eligible Beneficiaries
6,685,709
121,180
331,587
45,752
1,297,796
55,076
1,992,616
2,833,312
FY06
6,187,185
101,119
206,748
37,777
927,717
83,654
1,264,787
3,574,200
FY03
5,714,063Total Unique Users
96,130MTF, Mail Order & Retail
814,048MTF & Retail only
54,885MTF & Mail Order only
FY02Point of Service
181,881Retail & Mail Order only
79,124Mail Order only
1,033,576Retail only
3,454,419MTF only
Unique User Trends
Prevalence of Pharmacy Benefit Use
FY02 – FY06
FY02 FY03 FY04 FY05 FY06
< 65 64.0% 67.7% (5.8%)
67.8% (0.2%)
69.5% (2.5%)
70.1% (.55%)
≥ 65 73.9% 76.3% (3.2%)
78.3% (2.6%)
81.5% (4.1%)
84.3% (2.9%)
Total 65.9% 69.3% (5.2%)
69.8% (0.7%)
71.8% (2.9%)
72.9% (1.1%)
Prevalence # Users
=# Beneficiaries
Proportion of beneficiaries who fill one or more Rxs during a
given period of time=
Sources: PDTS
MHS PHARMACY BENEFIT USERS
Source: PDTS
0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Retail
MTF
Mail Order
Mil
lio
ns
of
Us
ers
FY01 FY02 FY03 FY04 FY05 FY06
DoD Pharmacy WorkloadRaw Number of Rx’s Filled
0
10000000
20000000
30000000
40000000
50000000
60000000
MTF Retail Mail
FY05
FY06
DoD Pharmacy Market ShareBy Point of Service – 30 Day Equivalents
0
10
20
30
40
50
60
MTF Retail Mail
FY2005 FY2006
Percent
DoD Drug Expenditures thru FY 2006
0 0 0 35 83 106 191 347 429 546 629 721181 193 245 283 342 455
681
12781848
2423
3097
3923
617 662 741 797878
1034
1170
1388
1565
1765
1634
1536
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Mail Retail MTF
.
Millions
DoD PharmacyDoD Pharmacy
YesterdayYesterday
Pharmacy Data Transaction Service (PDTS)• A centralized data repository that records information
about prescriptions filled for beneficiaries through Military Treatment Facilities, the Retail Pharmacy network and the TRICARE Mail Order Pharmacy
– Provides Drug-Drug interaction checking of the complete patient medication profile from all points of service (101 Legacy Data Centers, Mail Order, & Retail)
– Monitoring utilization and costs to support policy and formulary decisions
– Prevents same drug from being obtained from multiple sources
– Utilizes industry standard messaging (NCPDP 5.1)
Military Hospitals101 Legacy Data Centers
700+ Dispensing Sites
Mail Retail58,650+ Locations
Military Provider Civilian Network Provider
Electronic
DoD Pharmacy Points of Service
PDTS
Paper
Paper
AudioCARE
Military Hospitals Mail Retail
Military Provider Civilian Network Provider
PDTS
RxCOTS
ePrescribing
ePharmacy
TOL
Pharmacy Commercial Off the Shelf (RxCOTS)• Commercial Product
– Acquired October 2005– Will be integrated with Military Electronic
Health Record• Enterprise order portability
– Refills anywhere • Standard drug information across Enterprise• Policy implementation at an Enterprise and
Local Level• Immediate tracking of inventory and
dispensing
T-Pharm Contract
• RFP released 2006 • $50B value• What it does
– Consolidates mail and retail under one contract
– Decreases duplication of effort; simplifies contract administration
– Optimizes distribution model• VA participating in a limited way
Current Strategies
• Contain the growth at the retail point of service– Adjust co-pays to encourage use of mail order
pharmacy over retail pharmacies– Educate and market the benefits of mail order to
our beneficiaries– Expand program to allow voluntary price
reductions at retail by drug companies– Provide tools to MTF’s to monitor costs
• Expand Utilization Management efforts and data mining
• Promote generic drugs
Utilization Management Program
• Maximize use of:– Most cost effective agents– Most cost effective point of service
• Maximize use of:– Generic vice brand– Formulary vice non-formulary– Retail network vice non-network pharmacies– MOP vice retail pharmacies
Long Term Strategies• E-Pharmacy Initiatives• Contain the growth and costs at the retail
point of service– Pay MTF pharmacies for the ingredient cost plus
a co-pay• MTF Commanders should look at pharmacy as
a revenue source rather than a cost center• Will result in more open MTF formularies –
less need for patients to seek Rx in the retail network
– Expand number of military pharmacies • On base and off base• Full service formularies
MTF Pharmacies and Clinics– Today and Tomorrow?
Today Tomorrow?Formulary Closed Open
Staffing Individual Services Purple
Refills Local Central
Inventory ManagementEnterprise Data
Minimal - CHCS Extensive - Centricity
Clinical Opportunities Limited Unlimited
Defense Health Budget
• 2001 --- $18 Billion
• 2006 --- $38 Billion (8% of DoD budget today)
• 2015 --- $64 Billion (estimate) (12% of DoD budget)
Retirees Health Care Costs
• 2006 --- 58% DoD Health Care Dollars
• 2016 --- 66% DoD Health Care Dollars
Projections to 2015
• At current growth projections (11%) and under current benefit structure by 2015:
– MTFs - $4.68B– TRRx - $4.70B– TMOP - $0.38B– >age 65 using all points of service - $7.80B
TOTAL $17.50B (6.18B in FY2006)
Or 27.34% of the Defense Health Budget in 2015
Up from the 16.26% of DHP budget in 2006
Cost Increases Driven By:
• Benefit Expansions, including TRICARE for Life and TRICARE Reserve Select
• No changes in TRICARE fees the past ten years
• More beneficiaries attracted to low cost, expanded benefits, and quality of the program
• High inflation in the health care industry• Employers provided incentives for
beneficiaries to use TRICARE
Questions?