TRICARE’s PBM Cutting Generic Reimbursement?

By John Coster, RPh., Ph.D.

Many community pharmacists are reporting a steep reduction in reimbursement for generic drugs provided to military service members, dependents and retirees covered under the Pentagon’s TRICARE program.

Starting this summer, both generic reimbursement and dispensing fees were cut significantly, bringing them to levels well south of the already-reduced rates of private third-party payers, according to pharmacists who care for many TRICARE patients.

Many military bases are located in rural areas that are traditionally underserved health care markets. Independent community pharmacies play a vital role in these places. Large, sustained cuts in reimbursement could force these independent pharmacies to reduce hours, pare staff or close altogether – limiting TRICARE beneficiaries’ access to pharmacist services. Many of these same pharmacies will be dealing with cuts in Medicaid generic reimbursement as well, though they will be scaled back by provisions in the health care reform legislation.

 NCPA staff recently brought these concerns to officials at the Department of Defense (DoD). Express Scripts, Inc. was awarded another five-year contract to administer TRICARE’s pharmacy benefit, which took effect in late 2009. We shared with DoD data documenting the gap between TRICARE/Express Scripts’ below-market rates and more typical third-party payers which, in some cases, already fail to cover the cost paid by community pharmacies to acquire drugs.

On the plus side, we learned that the Pentagon has 47,000 pharmacies providing vaccines under TRICARE’s vaccination program which was recently extended to include community pharmacies. While currently limited to vaccines for H1N1, seasonal influenza, and pneumococcal disease, we’re hopeful they will expand this list to all recommended vaccines.

 Of course, if TRICARE’s generic reimbursement drops to the point that independent pharmacies are forced out of the network, the potential benefits of this growing vaccination program will be greatly diminished.

 NCPA intends to stay engaged with Pentagon officials both as they oversee the current contract, and as they look ahead to their next PBM contract, starting in 2014.

1 Response to “TRICARE’s PBM Cutting Generic Reimbursement?”

  1. 1 David Benton November 23, 2010 at 9:20 pm

    Thanks for the great article. It is important to keep this information on going and forward thinking negotiation with the DoD. I have used both the retail pharmacy and mail order program. Both work well and my copayments varied depending on the medication. When I use my TRICARE benefit, I also use TRICARE Supplement Insurance which reimburses me the copayment. For more information how the supplement works with the prescription copays, check out

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