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IG: Mail-order pharmacy saves money for beneficiaries, DoD

Aug. 13, 2013 - 04:15PM   |  
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The Tricare Mail Order Pharmacy program costs the government and beneficiaries less money than retail stores and is a safe, effective way to deliver medicine, a Defense Department audit has concluded.

Concerned over whether the highly touted program cost more or caused waste, Congress in 2012 asked the DoD Inspector General to review it for efficiency and effectiveness.

The IG found that between April and June 2012, the Tricare Mail Order Program, or TMOP, saved the Pentagon nearly 17 percent over Tricare’s retail pharmacy option: $399 million versus nearly $466 million at retail stores.

The audit also found that controls were in place to ensure beneficiaries received only pharmaceuticals for which they had prescriptions, a nearly 100 percent accuracy rate.

“Overall, the TMOP program was more efficient and effective than the retail programs, providing cost savings to DoD and potentially reducing health risks associated with dispensing incorrect pharmaceuticals,” wrote Alice Carey, assistant IG for contract management and payments.

The otherwise glowing report was not without caveats, however. Carey noted that the cost analysis did not include such items as contract costs and administrative overhead associated with mail order or retail prescriptions, and officials could not determine how much medication actually was wasted in the home delivery program as a result of Tricare shipping drugs that no longer were needed or because it dispensed 90-day supplies rather than 30-day fills.

The IG noted that industry trade groups report 15 percent of prescriptions in mail order pharmacy programs are wasted due to shipping unneeded drugs.

One study also indicated that a 90-day supply of medication, whether by mail or through retail in civilian programs, resulted in increased waste 57 percent of the time compared with a 30-day supply.

Tricare has pushed its mail-order pharmacy as a boon for beneficiaries and a source of big savings for the government.

A review of Tricare data showed that in 2011, the average cost to the Defense Department of a mail-order prescription was $101.90, versus $72.96 at a retail pharmacy.

But since nearly all prescriptions filled by mail order are for 90 days, and most filled at retail pharmacies are for 30 days or fewer, the cost is significantly lower for mail order, averaging about $30 to $35 per 30 days of medication.

The DoD IG sent its report to a bipartisan group of lawmakers on July 24.

A spokesman for Rep. Michael Michaud, D-Maine, one of the lawmakers who requested the audit, said Michaud planned to review the report during August recess in Maine.

According to Tricare, beneficiaries filled 137.4 million prescriptions at a cost of nearly $6.9 billion in 2011. More than a third were obtained at military treatment facilities, 56 percent were purchased at retail pharmacies, and 9 percent were filled through mail order.

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