DoD Pharmacy Programs TRICARE Conference 25 January 2005

1. DoD Pharmacy Programs  TRICARE Conference 25 January 2005 Colonel James H. YoungDirector, DoD Pharmacy Programs WelcomeWelcome

2. How we see this vision and how we manage this benefit, will have a dramatic impact on more than 9 million beneficiaries, one in every 7 DHP dollars, where you will get your prescriptions filled, and how much you pay for them now, and in the future. How we see this vision and how we manage this benefit, will have a dramatic impact on more than 9 million beneficiaries, one in every 7 DHP dollars, where you will get your prescriptions filled, and how much you pay for them now, and in the future.

3. How Can We Realize Our Vision Clearly define the roles for DoD Pharmacy and individual Service Pharmacy Operations Provide coordinated program oversight, benefit management, open and effective communication, and policy support to optimize delivery of pharmacy benefit Improve management of resources, based on metrics, that include both administrative overhead and drug acquisition costs comparing all three venues Ensure appropriate, safe, uniform, consistent, and equitable drug therapy to meet patients� clinical needs in effective, efficient, and fiscally responsible manner We must clearly define the roles and relationships of DoD and Service pharmacy operations while providing the proper level of oversight and management, if we are to control this benefit. It is imperative that we ensure a uniform, consistent, and equitable pharmacy benefit that meets our patient�s clinical needs, and it is equally imperative that we do this effectively, efficiently, and with utmost fiscal responsibility. We must clearly define the roles and relationships of DoD and Service pharmacy operations while providing the proper level of oversight and management, if we are to control this benefit. It is imperative that we ensure a uniform, consistent, and equitable pharmacy benefit that meets our patient�s clinical needs, and it is equally imperative that we do this effectively, efficiently, and with utmost fiscal responsibility.

4. DoD Pharmacy Operations Organizational Structure This is how we are organized today.This is how we are organized today.

5. Pharmacy Board of Directors Colonel W. Mike Heath, US Army Pharmacy Consultant (Chairperson) Colonel Jim Young, Director, DoD Pharmacy Programs Commander Mary Fong, US Coast Guard Pharmacy Consultant Colonel Phil Samples, US Air Force Pharmacy Consultant Captain Elizabeth Nolan, US Navy Pharmacy Consultant Commander Mark Richerson, Director, DoD Pharmacoeconomic Cntr I use this slide for both introductions and farewells. COL Heath will soon be retiring and COL Harper will be replacing him. DOL Davies will be retiring in just over 2 months. CDR Fong will be remaining with us and serve as our �corporate memory� for the board. Col Phil Samples has been selected to be Group Commander at Goodfellow AFB and will be replaced by a new director in the near future. CAPT Nolan will be turning over the Navy reins to CAPT Blanch. COL Remund will also be retiring soon and has already turned the PEC reins over to CDR Mark Richerson.I use this slide for both introductions and farewells. COL Heath will soon be retiring and COL Harper will be replacing him. DOL Davies will be retiring in just over 2 months. CDR Fong will be remaining with us and serve as our �corporate memory� for the board. Col Phil Samples has been selected to be Group Commander at Goodfellow AFB and will be replaced by a new director in the near future. CAPT Nolan will be turning over the Navy reins to CAPT Blanch. COL Remund will also be retiring soon and has already turned the PEC reins over to CDR Mark Richerson.

6. Pharmacoeconomic Center Organizational Structure This organizational chart shows how our PEC is currently organized.This organizational chart shows how our PEC is currently organized.

7. But know also, man has an inborn craving for medicine. Generations of heroic dosing have given his tissues such a thirst�for drugs. As I once before remarked, the desire to take medicine is one feature that which distinguishes man, the animal, from his fellow creatures. It is really one of the most serious difficulties with which we have to contend. Even in minor ailments, which would yield to dieting or to simple home remedies, the doctor�s visit is not thought to be complete without the prescription. Sir William Osler, MD, Teaching and Thinking, 1895 Why do our patients use their healthcare benefit? Simple�all of us suffer from at least a minor ailment at some time, and when we do, we often seek medical care. But, just as Sir William Osler said in 1895, �the doctor�s visit is not thought to be complete without the prescription.� It is this prescription that drives pharmacy workload, it is this prescription that affects our overall pharmacy budget, it is this prescription that, at least in part, has caused us to need the Uniform Formulary.Why do our patients use their healthcare benefit? Simple�all of us suffer from at least a minor ailment at some time, and when we do, we often seek medical care. But, just as Sir William Osler said in 1895, �the doctor�s visit is not thought to be complete without the prescription.� It is this prescription that drives pharmacy workload, it is this prescription that affects our overall pharmacy budget, it is this prescription that, at least in part, has caused us to need the Uniform Formulary.

8. Let us look at how things used to be�Let us look at how things used to be�

9. DoD Pharmacy Yesterday We used typewriters and sometimes desktop computers FAX became a common method of transmitting prescriptions Providers were writing prescriptions on paper Patients stood in long lines�some places they still do We filled prescriptions using counting trays and spatulas Patient safety was an issue and remains an issue today Pharmacy was MTF-centered with limited DoD policy role DoD looked to commercial arena to augment and replace pharmacy operations lost by the closure of many DoD facilities Response to evolving needs included expanded access, improved automation, robust marketing initiatives, and standardization We used typewriters, desktops, prescription pads, counting trays, spatulas� Pharmacy was very MTF-centric and we only considered expanding the benefit beyond the military base as a concept. However, as our operations began to change and we started to respond to beneficiary access issues, we had to think differently�DoD oversight became more critical and today, 44% of the pharmacy workload is conducted outside of our traditional MTF pharmacies. TMOP and TRRx are here now�our future, and what�s next, can only be imagined. We used typewriters, desktops, prescription pads, counting trays, spatulas� Pharmacy was very MTF-centric and we only considered expanding the benefit beyond the military base as a concept. However, as our operations began to change and we started to respond to beneficiary access issues, we had to think differently�DoD oversight became more critical and today, 44% of the pharmacy workload is conducted outside of our traditional MTF pharmacies. TMOP and TRRx are here now�our future, and what�s next, can only be imagined.

10. How are things different today?How are things different today?

11. DoD Pharmacy Today Computers �communicate� Workflow has been significantly automated 6.4 million Unique Users of 9.1 million beneficiaries (70%) 536 DoD Dispensing Facilities in 121 MTFs Over 54,000 TRICARE Retail Network Pharmacies One of the nation�s largest Mail Order Pharmacies $5,000,000,000 Pharmacy Benefit Program (100M Rx last yr) Pharmacy Data Transaction Service (PDTS) evolving Uniform Formulary and Beneficiary Advisory Panel in place RxCOTS Contract Award brings us into the future Largest drug distribution/pharmacy operation in the world We have automation that �communicates�, we have a whole lot more beneficiaries, we have a variety of dispensing systems at our MTFs, we have a link to almost all retail pharmacies in the nation (over 54,000 out of around 60,000), a mail order operation that exceeds just about anyone�s imagination, a tremendously large budget, a workload filling over 100 million prescriptions a year, a state-of-the-art PDTS that links all three venues, a newly implemented UF, a BAP which institutes an entirely different level of accountability, and the largest drug distribution system and pharmacy operation in the world.We have automation that �communicates�, we have a whole lot more beneficiaries, we have a variety of dispensing systems at our MTFs, we have a link to almost all retail pharmacies in the nation (over 54,000 out of around 60,000), a mail order operation that exceeds just about anyone�s imagination, a tremendously large budget, a workload filling over 100 million prescriptions a year, a state-of-the-art PDTS that links all three venues, a newly implemented UF, a BAP which institutes an entirely different level of accountability, and the largest drug distribution system and pharmacy operation in the world.

12. Numbers You Should Know 1 = 191 1 = 570,776 99.96 < 5 4000 = 121 I always want to provide the audience an educational experience. Take a good look at this slide�it is important. If you are taking notes, this may be your first main point.I always want to provide the audience an educational experience. Take a good look at this slide�it is important. If you are taking notes, this may be your first main point.

13. What The Numbers Mean In 1 min, DoD fills 191 Rxs In 1 hr, we spend $570,776.00 We process 99.96% Retail Network transactions electronically in < 5 sec Just over 1000 pharmacists and almost 3000 technicians serve 121 DoD MTFs worldwide I used to think 191 prescriptions in a day was a lot of work. Just think, while I stand before you, we will spend over a half million dollars. It is hard to consistently achieve 100% but this is close, and it is fast. This is a relatively small workforce, managing over 500 pharmacies at 121 MTFs, for a beneficiary population exceeding 9 million. I used to think 191 prescriptions in a day was a lot of work. Just think, while I stand before you, we will spend over a half million dollars. It is hard to consistently achieve 100% but this is close, and it is fast. This is a relatively small workforce, managing over 500 pharmacies at 121 MTFs, for a beneficiary population exceeding 9 million.

14. TRICARE Eligible BeneficiariesFY04 Just to show you the size and some demographics of the population we serve. It is growing by about a quarter of a million beneficiaries per year and today 53% of our beneficiaries are either retired or family members of retirees. Just to show you the size and some demographics of the population we serve. It is growing by about a quarter of a million beneficiaries per year and today 53% of our beneficiaries are either retired or family members of retirees.

15. Unique Users - Point of ServiceAll Ages, FY04 You will see these slides again but notice the proportional sizes of these bubbles. You will see these slides again but notice the proportional sizes of these bubbles.

16. Unique Users - Point of ServiceBy Age, FY04 You may see this slide again too, but notice the differences when we isolate the older population. You may see this slide again too, but notice the differences when we isolate the older population.

17. MHS Pharmacy Benefit UsersBy POS, Jul 01 � Sep 04 One thing in particular I want you to focus on here�the rise in the Retail use. One thing in particular I want you to focus on here�the rise in the Retail use.

18. �Per member per year ingredient costs continued to rise, increasing by 14.5% in 2003 for non-specialty drugs and 38.7% for specialty drugs. It is projected that without active management of the pharmacy benefit, per member per year drug costs will increase by 125% over the next five years.� Drug Trend Report 2003 ESI, June 2004 This quote is taken from the 2003 Drug Trend Report, produced by Express Scripts, Inc. It is not too difficult to believe, especially when you reflect on the costs of our benefit today.This quote is taken from the 2003 Drug Trend Report, produced by Express Scripts, Inc. It is not too difficult to believe, especially when you reflect on the costs of our benefit today.

19. MHS Outpatient Drug Spend($Millions) There is a lot of information on this slide and you can better digest it later, but for now, note that this is a focus on outpatient costs, the DoD drug expenditures have increased from about $1B to $5B in only 7 years. Also, please realize that the MTF values here do not include administrative overhead costs which would drive that cost up considerably; however, the Retail and Mail Order values do include administrative fees. There is a lot of information on this slide and you can better digest it later, but for now, note that this is a focus on outpatient costs, the DoD drug expenditures have increased from about $1B to $5B in only 7 years. Also, please realize that the MTF values here do not include administrative overhead costs which would drive that cost up considerably; however, the Retail and Mail Order values do include administrative fees.

20. Cost per Beneficiary by AgeFY02 � FY04 Pay particular attention to the significant cost difference between <65 and >65. Recall the bubble chart that indicated such a large number of elderly patients using Retail, currently the most costly of the three venues based on relative use. Current federal pricing initiative likely to have significant impact on this pricing. Pay particular attention to the significant cost difference between <65 and >65. Recall the bubble chart that indicated such a large number of elderly patients using Retail, currently the most costly of the three venues based on relative use. Current federal pricing initiative likely to have significant impact on this pricing.

21. Just FYI. Some think our copay is too low. However, I believe our beneficiaries do deserve the very best we can provide. I wish it was free but practically speaking, these copays are necessary. Just FYI. Some think our copay is too low. However, I believe our beneficiaries do deserve the very best we can provide. I wish it was free but practically speaking, these copays are necessary.

22. Pharmacoeconomics Center Central to today�s pharmacy benefit Composed of many parts PEC is the clinical and analytical arm supporting P&T PDTS is the backbone connecting all venues CSSC is our voice to our customers, worldwide CORs manage two systems doing 44% workload Although we sometimes refer to the PEC collectively as all these things, it really is distinctive in its function. It is clearly central to today�s pharmacy operations. It is more specifically our clinical and analytical arm supporting our operations. The PDTS is our electronic backbone; the CSSC is our customer�s voice; and the CORs�well they do an amazing work�Although we sometimes refer to the PEC collectively as all these things, it really is distinctive in its function. It is clearly central to today�s pharmacy operations. It is more specifically our clinical and analytical arm supporting our operations. The PDTS is our electronic backbone; the CSSC is our customer�s voice; and the CORs�well they do an amazing work�

23. Pharmacy Data Transaction Service PDTS Fully implemented June 2001 On-line central data repository for all pharmacies (MTF, TRICARE Retail Network, Mail Order) Enhances patient safety through interactive clinical screening across all points of service Robust data warehouse for reporting/trend analysis I have already noted that the PDTS is our electronic backbone�it connects all three venues�it is a unique system whether you consider military or civilian systems.I have already noted that the PDTS is our electronic backbone�it connects all three venues�it is a unique system whether you consider military or civilian systems.

24. Military Treatment Facility Pharmacy 536 DoD Dispensing Pharmacies in 121 MTFs Beneficiaries have access to prescriptions without co-pay (Least costly to patient) Formulary composed of Basic Core Formulary plus MTF specific additions Possibly least costly option to DoD�WDYT? 56% Rx workload performed at MTF I�ll go through the next three slides quickly and you can reference them at your leisure, but just remember, there is no patient co-pay in the MTF, only 56% of the workload is conducted here and it is shifting, and we can only say it is �possibly� the least costly option for DoD due to an incomplete understanding of ALL costs at the MTF. I�ll go through the next three slides quickly and you can reference them at your leisure, but just remember, there is no patient co-pay in the MTF, only 56% of the workload is conducted here and it is shifting, and we can only say it is �possibly� the least costly option for DoD due to an incomplete understanding of ALL costs at the MTF.

25. TRICARE Mail Order Pharmacy TMOP Contract awarded to Express Scripts, Inc. 11 Sep 02 Services began 1 Mar 03 Services via state-of-the-art facility in Tempe, AZ dedicated to DoD workload Product replenishment through Prime Vendor (McKesson ) at Federal Pricing DoD Pharmacist as Contracting Officer Representative Largest commercial mail order account transfer within industry 13% of Rx workload performed at TMOP We do enjoy a preferred pricing structure for TMOP, and currently we process 13% of our workload there. It has increased by 5% over the past 6 months or so. We do enjoy a preferred pricing structure for TMOP, and currently we process 13% of our workload there. It has increased by 5% over the past 6 months or so.

26. TRICARE Retail Pharmacy TRRx Contract Awarded to Express Scripts, Inc. 26 Sep 03 Services began 1 Jun 04 DoD Pharmacist as Contracting Officer Representative Consolidated retail pharmacy services under a single contract to optimize benefit management Streamlined claim processing/network management Consistent benefit across all regions Portability in 50 states, Guam, Puerto Rico, US Virgin Islands Pharmacy Help Desk Services 24 x 7 x 365 TRRx Dedicated Staff Almost 54,000 Retail Pharmacies Now Participate 31% Rx workload performed at TRRx TRRx now controls 31% of the workload and clearly is more costly in that we do not yet get a preferred federal price on the pharmaceuticals, and there is an added administrative fee; however, our overall cost is offset considerably as there is a copay which is three times greater than TMOP. We are currently in the process of obtaining federal pricing in the retail network pharmacies. TRRx now controls 31% of the workload and clearly is more costly in that we do not yet get a preferred federal price on the pharmaceuticals, and there is an added administrative fee; however, our overall cost is offset considerably as there is a copay which is three times greater than TMOP. We are currently in the process of obtaining federal pricing in the retail network pharmacies.

27. DoD P&T Committee Process Identify classes for consideration Clinical and cost effective analysis performed by PEC (data collection, pricing, etc.) P&T deliberation and evaluation Prepare P&T Minutes for Beneficiary Advisory Panel and Director, TMA BAP meets and provides comments for Dir, TMA Recommendations and comments from P&T and BAP forwarded to Director, TMA Decision on recommendations, minutes signed This is a summary of how our P&T functions. This is a summary of how our P&T functions.

28. Established process for DoD to determine formulary status Established the DoD P&T Committee as the mechanism to identify agents for the third tier and prior authorizations Established the BAP as a means for beneficiary representatives to comment on P & T recommendations Proposed Rule was published 12 Apr 2002 Comment period closed 11 Jun 2002 3311 comments received Paper - 1,621 Email - 1,690 Comments compiled, considered. and Final Rule prepared Final Rule published 1 April 2004 including responses Implementation We mentioned earlier that NDAA established the parameters for the UF. The �Rule� was written, proposed, and finally published in April of last year. That Rule established the process for us to determine formulary status. It is important to notice here that there was a published, open comment period and that over 3,000 comments came in from many sources.We mentioned earlier that NDAA established the parameters for the UF. The �Rule� was written, proposed, and finally published in April of last year. That Rule established the process for us to determine formulary status. It is important to notice here that there was a published, open comment period and that over 3,000 comments came in from many sources.

29. Uniform Formulary Benefits Uniform access to all medications Non-formulary access provided through 2 points of service although legislation required �at least one� Provides the tool needed to manage the whole benefit Co-pay structure encourages use of TMOP over retail and network over non-network, especially for non-formulary products Increases standardization among MTF formularies with BCF and ECF while preserving some flexibility Provides beneficiary input to formulary process through the Beneficiary Advisory Panel Third-Tier Drugs (NF) will not be available on the MTF formulary, but will be in TMOP and TRRx; however, the copay structure is the tool that will enable us to better influence both patient and provider use. Please don�t underestimate the third bullet here�the newly formed BAP will introduce a new level of oversight and give our patients a loud voice in the Uniform Formulary process.Third-Tier Drugs (NF) will not be available on the MTF formulary, but will be in TMOP and TRRx; however, the copay structure is the tool that will enable us to better influence both patient and provider use. Please don�t underestimate the third bullet here�the newly formed BAP will introduce a new level of oversight and give our patients a loud voice in the Uniform Formulary process.

30. Uniform Formulary Is a Critical Management Tool Formulary management and tiered co-pays are industry standards and best commercial business practices used to manage a pharmacy benefit Historically, formulary management was not uniform across the Military Health System TMOP: Has been determined by DoD Pharmacy and Therapeutics Committee (P&T) Direct Care: Has been Basic Core Formulary via DoD P&T plus local Facility P&T decisions TRRx: Has been an open formulary, except for those excluded by law Notice I say Historically in the second bullet�I also say �Has Been� three times. This is changing�Notice I say Historically in the second bullet�I also say �Has Been� three times. This is changing�

31. Key Points Uniform Formulary Encourages use of more cost-effective Point of Service and therapy Influences beneficiary and provider choice Permits tiered co-pays: Generic, Formulary, NF Allows beneficiaries to obtain NF drugs that are �clinically necessary� at the 2nd Tier co-pay Permits Prior Authorization Requires Non-formulary drug availability Final Rule established new DoD P&T and UF BAP A quick recap of the key issues associated with the UF. Read the slide� A quick recap of the key issues associated with the UF. Read the slide�

32. Department of Defense Pharmacy & Therapeutics Committee I have been referring to the newly defined or newly formed P&T. This graphically depicts the differences between the old and the new. Note two key differences, the decisional authority has been transferred from the P&T to the TMA Director. Also, the BAP must comment before the TMA Director can render a UF decision.I have been referring to the newly defined or newly formed P&T. This graphically depicts the differences between the old and the new. Note two key differences, the decisional authority has been transferred from the P&T to the TMA Director. Also, the BAP must comment before the TMA Director can render a UF decision.

33. DoD P&T Committee Voting MembersYour Representatives Physician Chairman (HA/TMA) Director, DoD Pharmacy Programs, TMA Director, DoD PEC Internal Medicine providers from each service Pediatrician from one service (Army) Family Practice from one service (Navy) OB/Gyn from one service (AF) One provider at large from each service One pharmacist from each service Coast Guard: one physician or pharmacist Department of VA : one physician or pharmacist TRRx COR TMOP COR Here is the New P&T Committee. The Peds, FP, and OB/Gyn representative from the Services are intended to rotate, but timing, replacement, and availability may interfere with that intended process. I must tell you, I am clearly impressed with the quality of candidates the Services have sent to represent you and your facilities.Here is the New P&T Committee. The Peds, FP, and OB/Gyn representative from the Services are intended to rotate, but timing, replacement, and availability may interfere with that intended process. I must tell you, I am clearly impressed with the quality of candidates the Services have sent to represent you and your facilities.

34. DoD P&T Committee Non-Voting Members JRCAB (readiness folks) TMA General Counsel TMA Resource Management Directorate Defense Supply Center Philadelphia Here are your non-voting members of the DoD P&T. These members are clearly just as critical to the recommendations that come out of the P&T.Here are your non-voting members of the DoD P&T. These members are clearly just as critical to the recommendations that come out of the P&T.

35. Committee Responsibilities Evaluate clinical effectiveness and cost effectiveness of pharmaceutical agents Recommend pharmaceutical agents for: Uniform Formulary Basic Core Formulary Extended Core Formulary Medical necessity criteria for drugs classified as non-formulary (3rd tier) Restrictions / limitations Prior authorization Quantity limits TRRx and TMOP This is what the DoD P&T Committee does. It evaluates the data, particularly the analysis provided by the PEC. It will make recommendations for the UF, the BCF, and the ECF�a new term for many, but we will talk more about it shortly. The P&T will also establish medical necessity criteria for drugs classified as third-tier and will establish criteria for prior authorization restrictions and quantity limitations that also apply to TMOP and TRRx.This is what the DoD P&T Committee does. It evaluates the data, particularly the analysis provided by the PEC. It will make recommendations for the UF, the BCF, and the ECF�a new term for many, but we will talk more about it shortly. The P&T will also establish medical necessity criteria for drugs classified as third-tier and will establish criteria for prior authorization restrictions and quantity limitations that also apply to TMOP and TRRx.

36. Beneficiary Advisory Panel (BAP) Operates under Federal Advisory Committee Act (FACA) and provides new level of accountability and oversight for the UF process Purpose is to provide beneficiaries a voice and representation in the UF process Members consist of nominees from major beneficiary representative organizations such as MOAA, contractors, professionals Well, this is the BAP you have been hearing me talk about. FACA is a big deal. FACA oversight requires the meeting to be open to the public, the minutes to be published in the Federal Register, this is clearly not conducted without the opportunity for lots of scrutiny. It does provide the beneficiary a voice and the membership is very diverse. Just as I stated about the quality of the P&T membership, I am equally impressed with these folks. Our beneficiaries are well represented and have some of the most powerful, influential, and �loud� voices to speak for them. The first BAP meeting will follow the DoD P&T meeting by about 5 or 6 weeks and we are anticipating up to 200 to attend the first meeting. It will last only one day, there will be an opportunity for public comment but limited, and hopefully very orderly and controlled.Well, this is the BAP you have been hearing me talk about. FACA is a big deal. FACA oversight requires the meeting to be open to the public, the minutes to be published in the Federal Register, this is clearly not conducted without the opportunity for lots of scrutiny. It does provide the beneficiary a voice and the membership is very diverse. Just as I stated about the quality of the P&T membership, I am equally impressed with these folks. Our beneficiaries are well represented and have some of the most powerful, influential, and �loud� voices to speak for them. The first BAP meeting will follow the DoD P&T meeting by about 5 or 6 weeks and we are anticipating up to 200 to attend the first meeting. It will last only one day, there will be an opportunity for public comment but limited, and hopefully very orderly and controlled.

37. DoD Formulary Management Policy HA 04-032 � TRICARE Pharmacy Benefit Program Formulary Management � 22 Dec 04 Describes UF, BCF, ECF & MTF Formulary management Replaces previous HA formulary policies HA 98-034 � Policy for Basic Core Formulary and Committed Use Requirements Contracts � 27 Apr 1998 HA 98-025 � Policy for Implementation of the DoD Pharmacy and Therapeutics Committee � 23 Mar 1997 HA Memo � Policy for Dispensing Prescriptions in Outpatient Military Pharmacies � 8 Dec 1999 10 USC 1074g requires �you write it, you fill it� This is the new letter that just went out to your Services and facilities. It describes the UF in more detail in that it addresses the BCF, the ECF, and implications for the MTF formulary. It did replace several other policies. A question related to the rescission of 8 Dec 1999 letter caused us to readdress the purpose of the policy signed on that date by Dr Sue Bailey regarding �you write it, you fill it�. That policy was an attempt to curtail and preclude MTFs from inappropriately diverting workload from the MTF to the network while keeping distributed resources. The law states �you write it, you fill it�. You will see a memo addressing this issue soon�it still applies.This is the new letter that just went out to your Services and facilities. It describes the UF in more detail in that it addresses the BCF, the ECF, and implications for the MTF formulary. It did replace several other policies. A question related to the rescission of 8 Dec 1999 letter caused us to readdress the purpose of the policy signed on that date by Dr Sue Bailey regarding �you write it, you fill it�. That policy was an attempt to curtail and preclude MTFs from inappropriately diverting workload from the MTF to the network while keeping distributed resources. The law states �you write it, you fill it�. You will see a memo addressing this issue soon�it still applies.

38. DoD Core Formularies(Ref: HA 04-032) All drug classes will fall under either Basic Core Formulary (generally primary care) Extended Core Formulary (all other classes, generally specialized care) Drugs are selected for the BCF or ECF because they provide greater value than other drugs on the Uniform Formulary Where clinically appropriate, MTFs should maximize the use of BCF and ECF drugs over other UF drugs The �Policy� states that drugs will generally fall in either the BCF or ECF. Drugs are put in these classes due to their demonstrated value that is greater than other drugs on the UF. We do encourage use of the ECF when that class of drugs is needed and if that class is needed, all P&T-identified ECF drugs must be maintained on the MTF formulary. The BCF is required to be on the MTF formulary. All drugs on the ECF will not necessarily be on the MTF formulary. The �Policy� states that drugs will generally fall in either the BCF or ECF. Drugs are put in these classes due to their demonstrated value that is greater than other drugs on the UF. We do encourage use of the ECF when that class of drugs is needed and if that class is needed, all P&T-identified ECF drugs must be maintained on the MTF formulary. The BCF is required to be on the MTF formulary. All drugs on the ECF will not necessarily be on the MTF formulary.

39. MTF Formulary Management(Ref: HA 04-032) MTF Formularies must contain: BCF drugs ECF drugs in each ECF drug class that is included on the MTF formulary MTF Formularies may also contain: Other UF drugs: generic (1st tier) or formulary (2nd tier) Drug used solely for inpatient services MTF Formularies cannot contain: Drugs classified as non-formulary on UF (3rd tier) Now I have to slow down a little so that I can keep all this straight. The BCF is required�no changes from how you have been doing business. The ECF consists of drugs outside the BCF and within that ECF category, the P&T will select some preferred drugs in some classes. IF you carry a drug in that class from which the P&T has recommended an ECF drug, you must carry each of those the P&T has recommended, but beyond that, in that class, you are free to choose which additional ECF drugs you want on your MTF inventory. This second bullet is not really different from the way you have been doing business. The last bullet reminds you that the MTF Cannot have 3rd tier drugs on the formulary.Now I have to slow down a little so that I can keep all this straight. The BCF is required�no changes from how you have been doing business. The ECF consists of drugs outside the BCF and within that ECF category, the P&T will select some preferred drugs in some classes. IF you carry a drug in that class from which the P&T has recommended an ECF drug, you must carry each of those the P&T has recommended, but beyond that, in that class, you are free to choose which additional ECF drugs you want on your MTF inventory. This second bullet is not really different from the way you have been doing business. The last bullet reminds you that the MTF Cannot have 3rd tier drugs on the formulary.

40. Non-formulary Agents(Ref: HA 04-032) $22 cost share per prescription at Mail Order and Retail - no questions asked $9 cost share if medical necessity is validated Excluded from all MTF formularies Available only upon approval from non-formulary special order process that validates Medical Necessity criteria established by the DoD P&T Committee MTF non-formulary special order process can only be used by: MTF providers Prescriptions written by a civilian provider to whom the patient was referred by the MTF Here are some notes you should be aware of regarding NF drugs. The copay is $22 at either Mail Order or Retail and the quantity limitations of up to 90-day and 30-day still apply. If a medical necessity has been validated, the copay is only $9. Non-formulary drugs are excluded from all MTF formularies. And, these limitations, as they apply to special orders, such that special orders are essentially controlled by the MTF providers.Here are some notes you should be aware of regarding NF drugs. The copay is $22 at either Mail Order or Retail and the quantity limitations of up to 90-day and 30-day still apply. If a medical necessity has been validated, the copay is only $9. Non-formulary drugs are excluded from all MTF formularies. And, these limitations, as they apply to special orders, such that special orders are essentially controlled by the MTF providers.

41. Current Issues Other Health Insurance (OHI) 1-866-ASK-4PEC 210-221-6122 FAX Mandatory Generic Policy Patients notified of policy enforcement after refills expire Pharmacy Metrics�Pharmacy Consultants� Initiative Monitor usage/prescribing patterns to provide data to Commander Federal Pricing First invoices to Manufacturers in January 05 Website: http://www.tricare.osd.mil/pharm_mfg/default.cfm Uniform Formulary/Beneficiary Advisory Panel Unexpected delays due to legal interpretations & redrafting of letters Cost Savings Initiatives Let�s look at some ideas where savings may be realized Here are some of the issues we are currently workingHere are some of the issues we are currently working

42. Contact Information JAMES H. YOUNG, Col, USAF, BSC Director, DoD Pharmacy Programs Office of the Assistant Secretary of Defense (HA) TRICARE Management Activity (OD) 5111 Leesburg Pike, Suite 810 Falls Church VA 22041-3206 703-681-0064���FAX 703-681-1242�� DSN 761-0064 �