TRICARE Proposed Rule

By Meredith Taylor, Esq., CIS Sr. Compliance Specialist & PCX Product Manager
meredithtaylor@cis-partners.com
& Katie Lapins, CIS Sr. Compliance Specialist
katielapins@cis-partners.com

Last week the Department of Defense issued a Proposed Rule (published in the Federal Register) to implement the provisions regarding TRICARE contained in the 2008 National Defense Authorization Act. The Act states ”the TRICARE retail pharmacy program (TRRx) shall be treated as an element of the DoD for purposes of procurement of drugs by Federal agencies under section 8126 of title 38, United States Code (U.S.C.), to the extent necessary to ensure pharmaceuticals paid for by the DoD that are provided by network retail pharmacies under the program to eligible covered beneficiaries are subject to the pricing standards in such section 8126.” The Act required the DoD to implement a regulation to carry out the intent of the Act. This Proposed Rule is the first step. The comment period is now open through September 23, 2008.

The TRICARE Pharmacy Benefits Program operates under the authority of 10 U.S.C. 1074g; this is the applicable statute. The Program provides outpatient drugs to TRICARE beneficiaries in three ways: (1) Military Treatment Facility (MTF) pharmacies, (2) TRICARE mail order, (3) and a TRICARE Retail Pharmacy Network. The Act and this Proposed Rule only address the Retail Pharmacy Network.

A summary of the major provisions of the rule include:
(1) An agreement by a manufacturer to honor the Federal Ceiling Prices (FCPs) in the Retail Pharmacy Network component of the Pharmacy Benefits Program is a condition of inclusion of a drug on the uniform formulary.

(2) The Rule seeks manufacturers’ comments on a legally permissible implementation approach and/or date from which to begin making prescriptions filled in the Retail Pharmacy Network subject to FCPs other than the data of the Act’s enactment;

(3) The basis of the refund will be the difference between the average non-federal price of the drug sold by the manufacturer to wholesalers, as represented by the most recent annual Non-FAMP (reported to the VA) and the FCP or, at the discretion of the manufacturer, the difference between the FCP and direct commercial contract sales prices specifically attributable to TRICARE paid pharmaceuticals, determined for each applicable National Drug Code (NDC) listing;

(4) In the case of the failure of a manufacturer of a covered drug to make or honor an agreement to ensure that DoD pays no more than the FCP for covered drugs provided through the TRICARE Retail Pharmacy Network component of the program, legal action may be taken.