1. Promoting high quality, cost effective drug therapy throughout the Military Health System Tools to Manage Purchased Care: An MTF Perspective CDR Jill Pettit, PharmD, BCPS TRRx/TMOP Contracting Officer Representative Jill.pettit@amedd.army.mil

2. DoD Pharmacoeconomic Center www.pec.ha.osd.mil 2 Unique Users 4Q FY01 – 4Q FY05 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 4QFY011QFY022QFY023QFY024QFY021QFY032QFY033QFY034QFY031QFY042QFY043QFY04 4QFY041QFY052QFY053QFY054QFY05 Unique Users MTF Only Retail Only MTF & Retail Only 46% 32% 12% 17% 68% 8%

3. DoD Pharmacoeconomic Center www.pec.ha.osd.mil 3 Tools the MTF Can Use? If you build it, will they come? Your competition –56,493 network pharmacies (Dec 05) Urban – 2 miles of 90% of benes Suburban – 5 miles of 95% of benes Rural – 15 miles of 95% of benes Many open 24/7 –Mail order – 90 day supply for $3/$9/$22 Marketing –Brochure each quarter to newly enrolled –Website – pharmacy locator, FAQ’s Customer service – 24 hours/day, 365 days/yr

4. DoD Pharmacoeconomic Center www.pec.ha.osd.mil 4 So What Can an MTF Do? Suggest retail utilizers use mail order Develop and use medical necessity process for non-formulary drugs You write it, you fill it! Keep the patients coming back

5. DoD Pharmacoeconomic Center www.pec.ha.osd.mil 5 Purchased Care Cost Saving Tools Quantity limits Prior authorizations –9 drug classes –Most have open ended expiration date Exception: anti-fungals, growth hormone, fertility drugs Uniform Formulary –Non-formulary drugs TRRx - $22.00/30days TMOP - $22.00/90 days Retail –Guaranteed reimbursement rate (AWP - % discount) Mail Order –Federal Pricing rather than AWP - % discount Note: NF fills no longer portable from MTF to retail and mail –Gives MTFs a chance to establish local MN processes

6. DoD Pharmacoeconomic Center www.pec.ha.osd.mil 6 Do PA’s Really Work? Assessing the success of PA criteria Frequency of request, approval rate, denial reasons PDE-5 Inhibitors (Jan ’05 - Mar ’05) 5,176 benes receiving PDTS reject 1,829 (35%) initiate the PA process 1,711 (94%) have PA approved

7. DoD Pharmacoeconomic Center www.pec.ha.osd.mil 7 TRRx PA Denial Rates – Nov ’05 Enbrel (124)1.61% Humira (114)1.75% Growth Hormone (56)11% Antifungals (1642)28% Fertility drugs (93)34%

8. DoD Pharmacoeconomic Center www.pec.ha.osd.mil 8 Uniform Formulary – How well is it working? Really too soon to tell What to evaluate –Utilizers willing to pay $22.00 –Utilizers that switch from retail to mail –Utilizers that pursue medical necessity – how successful are they? Frequency of request Approval rate Denial reasons –Cost savings across the MHS

9. DoD Pharmacoeconomic Center www.pec.ha.osd.mil 9 PPI Utilizers at the TMOP Uniform Formulary Rules In Effect on 17 July 2005

10. DoD Pharmacoeconomic Center www.pec.ha.osd.mil 10 PPI Utilizers at the TRRx Uniform Formulary Rules In Effect on 17 July 2005

11. DoD Pharmacoeconomic Center www.pec.ha.osd.mil 11 PDE-5 Utilizers at the TMOP Uniform Formulary Rules In Effect on 12 October 2005

12. DoD Pharmacoeconomic Center www.pec.ha.osd.mil 12 PDE-5 Utilizers at the TRRx Uniform Formulary Rules In Effect on 12 October 2005

13. DoD Pharmacoeconomic Center www.pec.ha.osd.mil 13 TRRx MN Determinations

14. DoD Pharmacoeconomic Center www.pec.ha.osd.mil 14 The Doc Really Wrote for THIS! Compounded items –TMOP compounds limited number of items Call ESI at 1-866-DoD-TMOP $9.00 copay/90 day supply –Some network pharmacies compound Call ESI at 1-866-DoD-TRRx $9.00 copay/30 day supply High cost, special distribution items –Over 200 network pharmacies that dispense special pharmaceuticals

15. DoD Pharmacoeconomic Center www.pec.ha.osd.mil 15 Drug Seeking Beneficiaries Can lock a beneficiary into one provider, one pharmacy Can block the beneficiary from receiving controlled substances at retail and mail

16. DoD Pharmacoeconomic Center www.pec.ha.osd.mil 16

17. DoD Pharmacoeconomic Center www.pec.ha.osd.mil 17 TPharm – Next Generation Pharmacy Contract TRICARE Retail (TRRx) and TRICARE Mail Order (TMOP) combined Anticipate award – Fall 2006 Mail Order Pharmacy – Start Feb 2008 Retail Pharmacy – Start June 2008

18. DoD Pharmacoeconomic Center www.pec.ha.osd.mil 18 Contract Objectives Uniform consistent, equitable prescription drug benefit Influence beneficiaries and physicians to increase utilization of most cost effective agents and venue Enhance patient safety through utilization of best commercial practice Ensure a high level of beneficiary satisfaction

19. DoD Pharmacoeconomic Center www.pec.ha.osd.mil 19 Significant Features Jurisdiction –Mail order – world wide –Retail network – US, Guam, Puerto Rico, US Virgin Islands, American Samoa?, Northern Marianna Islands? Guaranteed reimbursement rate Network access requirements –Urban – 2 miles of 90% of benes –Surburban – 5 miles of 95% of benes –Rural – 15 miles of 95% of benes –Network disruption tied to incentive Mail order to be replenished from National Prime Vendor –Managed Care Pricing File (MCPF) used for pricing PDTS to provide ProDur

20. DoD Pharmacoeconomic Center www.pec.ha.osd.mil 20 Enhancements On-line coordination of benefits Specialty pharmacy services Explanation of benefits (EOB) on line and on request Mail order to participate in DoD pharmacy returns contract Educational outreach by contractor MTF refills