Senators questioned Wednesday whether the financial details of the military’s Tricare pharmacy program benefit the contractor, Express Scripts, more than military beneficiaries.
Sen. Elizabeth Warren, D-Mass., raised concerns about anti-competitive tactics, questioning the practice of allowing Express Scripts — the largest pharmacy benefit manager in the United States — to have the contract as exclusive administrator of the Tricare pharmacy program, while owning and operating two mail-order pharmacies, Express Scripts Pharmacy and Accredo Specialty Pharmacy.
She questioned whether Express Scripts drives more business to itself, pushing local pharmacies out of the Tricare network and limiting beneficiaries’ access to more personalized local care.
“That is a clear conflict of interest,” Warren said during a hearing of the Senate Armed Services’ personnel subcommittee. It’s “an open invitation for Express Scripts to milk the federal government, kick out competitors, and steer big bucks to itself.”
Warren, ranking member of that subcommittee, said DoD requires the Tricare pharmacy contractor to own both a pharmacy benefit manager and a pharmacy.
The contractor, Express Scripts, receives a fixed administrative fee per prescription filled at retail pharmacies or the mail order pharmacy, said Dr. David J. Smith, a retired Navy rear admiral who is deputy director of the Defense Health Agency. The contractor can’t generate revenue from the prices of drugs, he said, and the DoD model eliminates common commercial industry profit mechanisms.
Under the mail-order program, the government buys the drugs, and Express Scripts dispenses the drugs and are paid that administrative fee. The amount of that fee, or other information about the contract, is not public knowledge, as DoD and Express Scripts consider it proprietary information.
Beneficiaries pay $14 per prescription filled through the mail order pharmacy and $16 at network retail pharmacies. That money isn’t kept by Express Scripts; it goes to the Defense Health Agency, said Adam Kautzner, president of Express Scripts and Evernorth Care Management. Beneficiaries can get their prescriptions filled at military treatment facilities at no charge.
In general, DoD has been trying to move to mail order because it’s cheaper, Smith said, and because of the convenience for beneficiaries.
DoD continues to find ways to deliver the benefit to make sure beneficiaries have access to their medication, in a “fiscally responsible way,” he said, adding that they’re also working on ways to shore up the supply chain for medications.
But as the government contractor, Express Scripts decides which pharmacies are in the Tricare retail pharmacy network and how much they are reimbursed.
Since 2022, more than 13,000 local pharmacies have left the network, leaving nearly 400,000 military families scrambling to find a new pharmacy in network, Warren said.
Currently, there are 46,000 retail pharmacies across the country that voluntarily participate in the Tricare retail pharmacy network, Kautzner said. As a result, 98% of beneficiaries have a retail option within 15 minutes of their home, he said, which exceeds the contract requirements.
Of the 46,000 pharmacies in the network, 16,000 are independent pharmacies.
Among those pharmacies that left the network was Roden-Smith Pharmacy in Clovis, N.M. Its owner, Micah Lansford, testified that the terms of the contract Express Scripts offered his pharmacy forced them out of the program in 2023.
Under the previous contract, the pharmacy had been reimbursed an average of about $0.37 below their actual cost for the 6,750 prescriptions they filled, causing the pharmacy to lose nearly $2,500 in 2022.
Under the terms of the contract Express Scripts proposed for 2023, Roden-Smith would have lost nearly $9 on average for each prescription and $60,000 for the same volume in 2023.
Lansford described the real-life consequences for the military community of. having fewer local pharmacies.
“Community pharmacies like mine provide a higher level of personal care, easier access,” he said.
He gave the example of a disabled U.S. Air Force retiree, whose caregiver relied on Lansford to review each monthly fill of medications, reconciling any changes and making sure his medications still made sense.
He also spoke of young active duty spouses who could no longer use his pharmacy drive-thru to pick up an antibiotic for their child, but are instead waiting in long lines to get onto base, hoping the antibiotic is in stock at the military pharmacy.
Greg Reybold, vice president of the American Pharmacy Cooperative, which includes about 1,500 independent pharmacies, said while Express Scripts touts the savings of the mail order pharmacy, it’s cheaper to fill prescriptions at the retail pharmacies than through Express Scripts mail order.
Filling generic drugs at Tricare retail pharmacies is cheaper for beneficiaries, and for the Defense Health Agency, he said. If for example, the drug costs the pharmacy $3, the beneficiary pays that instead of the usual $16 Tricare copay.
When 13,000 retail pharmacies left the network, he said, “the only winner was the Express Scripts mail order pharmacy,” because beneficiaries were forced to use that pharmacy.
Reybold and Lansford both called for an independent audit of the pharmacy program.
“We have a strong desire to serve these people, and want to be there for them,” Lansford said. “And we want a fair deal to provide service.”
Karen has covered military families, quality of life and consumer issues for Military Times for more than 30 years, and is co-author of a chapter on media coverage of military families in the book “A Battle Plan for Supporting Military Families.” She previously worked for newspapers in Guam, Norfolk, Jacksonville, Fla., and Athens, Ga.
