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Defense Health Agency

"On October 1, 2013, the Department of Defense established the Defense Health Agency (DHA) to manage the activities of the Military Health System. These activities include those previously managed by TRICARE Management Activity (TMA), which was disestablished on the same date. During the next several months, all TMA websites will change to reflect the new DHA. We appreciate your patience during this transition."
 
Introduction
The Department of Defense (DoD) is required by law (10 U.S.C. § 1074g) to establish an effective, efficient, integrated pharmacy benefits program for the Military Health System (MHS). The law and implementing regulation (32 CFR Section 199.21) describe the process by which the DoD Pharmacy and Therapeutics (P&T) Committee will consider the relative clinical effectiveness and relative cost effectiveness of pharmaceutical agents in a therapeutic class in recommending the selection of agents for the DoD Uniform Formulary (UF) and, for cost sharing purposes, the classification of a pharmaceutical agent as generic, formulary, or non-formulary. The classification of a pharmaceutical agent determines the cost share that eligible beneficiaries must pay in order to obtain a prescription from the TRICARE Mail Order Pharmacy (TMOP), or a TRICARE network retail pharmacy. Eligible beneficiaries do not pay a cost share in order to obtain a prescription from a military treatment facility (MTF).

Pharmaceutical agents included on the UF are required by 10 U.S.C. 1074g(a)(2)(E) to be available to TRICARE beneficiaries from MTF pharmacies (with certain limitations described below), the TMOP, and through retail (network and non-network) pharmacies. Pharmaceutical agents that a company can not make available in all three venues will not be considered for the UF. Pharmaceutical agents not included on the UF are non-formulary agents, and are generally available to TRICARE beneficiaries only through TMOP or retail pharmacies at the higher beneficiary cost share shown in Table A.

Table A. Formulary Classifications and Cost Shares
UF Cost Share Tier Classification TMOP Cost Share
(Up to a 90-day supply)
Retail Network Pharmacy
Cost Share

(Up to a 30-day supply)
Generic $3 $3
Formulary $9 $9
Non-formulary $22 $22

In addition to the UF, the DoD P&T Committee accomplishes formulary management for the Military Health System through the Basic Core Formulary (BCF) and Extended Core Formulary (ECF). The BCF and ECF are subsets of the UF, and are based on an additional determination of the relative clinical effectiveness and relative cost effectiveness of UF agents by the DoD P&T Committee. The UF, BCF, and ECF govern much of the content of MTF formularies, as outlined in the Health Affairs Policy 04-032 entitled, TRICARE Pharmacy Benefit Program Formulary Management. The same policy governs the formularies of the USFHP Designated Providers.

Determining the Cost of Pharmaceutical Agents

As part of its evaluation of the relative cost effectiveness of a pharmaceutical agent for UF selection, the DoD P&T Committee will consider the cost of a pharmaceutical agent to the Government in three dispensing venues: MTFs, the TMOP, and the TRICARE Retail Pharmacy Network. The cost of pharmaceuticals dispensed through retail pharmacies that are not part of the TRICARE Retail Pharmacy Network will not be considered.

As part of its evaluation of the relative cost effectiveness of a pharmaceutical agent for BCF or ECF selection, the DoD P&T Committee will consider the cost of a pharmaceutical agent to the government in only the MTF dispensing venue.

The Drug Classes Under Review page provides links to specific drug class pages that describe the procedure for determining the cost of pharmaceutical agents to the government for each dispensing venue.

Determining the Cost Effectiveness of UF Pharmaceutical Agents

After the cost of the pharmaceutical agent to the Government has been established using the methodology described above, the DoD P&T Committee shall consider the relative cost effectiveness of pharmaceutical agents in the therapeutic class as outlined in 32 C.F.R. 199.21(e)(2). As part of that analysis, the DoD P&T Committee will consider:
  • For the MTF and Mail dispensing venues - The lower of:
    • A UF BPA price quote
    • Big 4 FSS price as listed on the first day of the month preceding P&T
  • For the Retail dispensing venue - The lower of:
    • 2008 non-FAMP minus the per unit UF VARR calculated refund
    • Absent a UF VARR Quote, the current price as of the first day of the month preceding P&T
    • If TMA signs a UF VARR higher than the FCP, this does not waive any right of the Department of Defense under 10 U.S.C. 1074g(f).
  • The historical usage data from each DoD dispensing venue
These elements will be used to determine the weighted average cost of the pharmaceutical agent within each DoD dispensing venue and across the three DoD dispensing venues. The weighted average cost of a pharmaceutical agent will most often be expressed in terms of the weighted average cost per day of therapy, although other measures of weighted average cost may be used. Additional information regarding the determination of the cost of pharmaceutical agents for particular therapeutic classes may be found on the specific drug class pages that are linked to Drug Classes Under Review.

Assuming that the DoD P&T Committee's relative cost effectiveness analysis determines that its recommendation will be that a pharmaceutical agent not be excluded from the UF, the DoD P&T Committee will apply the standards described in 32 C.F.R. 199.21(j) to determine whether it is more appropriate to classify the pharmaceutical agent as generic or formulary for cost sharing purposes.

Determining the Cost Effectiveness of UF Agents for Inclusion on the BCF or ECF

The DoD P&T Committee determines whether a given therapeutic class will be included on the BCF or the ECF. After the DoD P&T Committee determines which pharmaceutical agents are recommended to remain on the UF within a given therapeutic class, the DoD P&T Committee shall make a separate determination regarding the relative cost effectiveness of those agents for the purpose of selecting one or more agents for inclusion on the BCF or ECF. In determining the relative cost effectiveness of a pharmaceutical agent for placement on the BCF or ECF, the DoD P&T Committee will use the most favorable price available for the MTF venue. To enable a manufacturer to propose its best BPA price for the MTF venue contingent upon selection of an agent for the BCF or ECF, the DoD P&T Committee will announce whether a given class will be considered for placement of an agent on the BCF or ECF at the same time it announces the therapeutic classes to be reviewed.

The DoD accepts price quotes using two different instruments; the UF BPA price quote and the UF VARR quote. Pharmaceutical companies must use the UF BPA price quote for prices that will apply to MTFs and the TRICARE Mail Order Pharmacy (TMOP). Pharmaceutical companies must use the UF VARR quote for refunds that will apply to pharmaceuticals dispensed by pharmacies in the TRICARE Retail Pharmacy Network. While generally similar, each instrument has specific instructions and different submission details.

Price Information in a BPA Price Quote

Pharmaceutical companies may submit reduced prices for their pharmaceutical agents in a BPA price quote that conforms to the conditions specified in the Template for BPA Price Quotes. Companies may submit BPA prices for the MTF and TMOP venues that are contingent upon the pharmaceutical agent being included on the UF, and classified as either generic or formulary for cost share purposes. BPA prices that are contingent upon placement in the generic cost share tier will not be accepted.

Companies may submit an additional reduced price for the MTF venue that is contingent upon the pharmaceutical agent being included on the BCF or ECF. For some drug classes, DoD may require multiple price quotes that are contingent upon the number of pharmaceutical agents selected for the UF and/or BCF and/or ECF. Each specific drug class page linked to Drug Classes Under Review will state whether or not such multiple price quotes are required for a particular therapeutic class.

The pharmaceutical agent may be flat priced across all strengths and dosage forms and/or across dispensing venues, or the pharmaceutical agent may be priced differently by strength, dosage form, and/or dispensing venue. However, the price per unit for a given dosage form and strength must be the same for all available package sizes (e.g., 30s, 100s, 1000s) within a given dispensing venue. Exceptions to this policy can be requested as outlined below in the Paragraph titled "Instructions for Completing a BPA Price Quotes." Price quotes will remain confidential until the Director, TMA, approves the inclusion of the pharmaceutical agent on the UF, and a BPA incorporating the quotes is executed. The price information that must be provided in a BPA price quote for a pharmaceutical agent in a class from which agents will be selected for inclusion on the BCF is illustrated in a hypothetical example in Table B below. [NOTE: The same price information would be required for a pharmaceutical agent in a class from which agents will be selected for inclusion on the ECF. The only change is that the heading in the last column would read "MTF price if included on ECF."]

Table B. Hypothetical BPA Price Quote
for Pharmaceutical Agents in a Therapeutic Class
From Which Agents will be Selected for Inclusion on the BCF
All Prices Must Include Applicable Industrial Funding Fee (IFF)
Pharmaceutical Agent TMOP Price if Included on UF (and classified as generic or formulary) MTF Price if Included on UF (and classified as generic or formulary) MTF Price if Included on BCF
Drug Name Dosage Strength Dosage Form Package Size NDC $ Per Package $ Per Dosage Form $ Per Package $ Per Dosage Form $ Per Package $ Per Dosage Form
Gorillacillin 250 mg Tablet 90 99009123490 9.00 0.1000 9.00 0.1000 7.20 0.0800
Gorillacillin 500 mg Tablet 100 99009123590 15.00 0.1500 15.00 0.1500 12.00 0.1200

In this hypothetical example, if the Director, TMA, approves Gorillacillin for inclusion on the UF at the generic or formulary cost share tier, but Gorillacillin is not included on the BCF, Gorillacillin 250 mg tablets will be priced at $0.1000 per tablet and $9.00 per package in the MTFs and $0.1000 per tablet and $9.00 per package in the TMOP. Gorillacillin 500 mg tablets will be priced at $0.1500 per tablet and $15.00 per package in the MTFs, and $0.1500 per tablet and $15.00 per package in the TMOP. If Gorillacillin is included on the BCF, the Gorillacillin 250 mg tablets will be priced at $0.0800 per tablet and $7.20 per package in the MTFs and 500 mg tablets will be priced at $0.1200 per tablet and $12.00 per package in the MTFs. NOTE: No more than one MTF price for each quoted NDC will be executed. In this example, if Gorillacillin is included on the BCF, only the prices labeled "MTF Price if Included on BCF" will be executed.

If the TMA Contracting Officer then executes the BPA, incorporating the prices into the appropriate pricing data base (e.g., Defense Supply Center Philadelphia (DSCP) Prime Vendor electronic pricing data base), the prices would no longer be confidential.

If the Director, TMA, approves the classification of Gorillacillin as non-formulary, none of the prices in the BPA price quote will take effect and the prices identified in the BPA price quote will remain confidential.

The BPA price quote shall remain valid for 180 days. This time period is necessary to allow sufficient time for the DoD P&T Committee to consider the prices, make a recommendation, forward their recommendation (without the specific price information) to the Beneficiary Advisory Panel for comment, allow the Director, TMA, to render a final decision regarding UF selection and cost share classification of the pharmaceutical agent, and allow DoD to begin administering the BPA to ensure pricing accuracy. The TMA decision will establish a BPA for that pharmaceutical agent based on the prices and conditions included in the BPA price quote.

Instructions for Completing a BPA Price Quote

NOTICE: The quoting company must have an existing FSS Contract for any pharmaceutical agent(s) quoted for UF BPA evaluation. The Veterans Administration has determined that FSS Interim Agreements are undefinitized letter contracts which do not support the execution of UF BPAs. UF BPA quotes for which FSS Contract coverage cannot be verified on date of quote receipt may be rejected by the Contracting Officer.

NOTICE: The quoted MTF pricing will be available to USFHP Designated Providers.

Pharmaceutical companies must use the UF BPA template with the associated UF BPA Appendix to prepare a BPA price quote, being sure to complete all portions of Paragraphs 1, 10.a, 10.b, 10.c, and 12 as well as the appropriate Table 1 or Table 2 in accordance with the information provided in the 'Drug Class Page'. Pharmaceutical companies wishing to submit BPA price quotes for more than one drug must submit a separate, complete, BPA price quote for each FDA-approved molecular entity.

If the specific drug class page linked to Drug Classes Under Review states that multiple BPA price quotes that are contingent upon the number of pharmaceutical agents selected for the UF and/or BCF and/or ECF are required, pharmaceutical companies submitting UF BPA price quotes must submit a separate, complete, BPA price quote for each NDC in UF BPA Appendix of the template for BPA price quotes. The Condition Set that applies to a given price quote must be identified in Paragraph 10.c of the UF BPA price quote. 

All prices quoted must include applicable FSS Industrial Funding Fee (IFF). The price per unit for a given dosage form and strength must be the same for all package sizes within a given dispensing venue. All package sizes must be expressed as whole numbers using numeric characters only. Any alpha-numeric package size information provided must be included in the drug name field. Prices per dosage form and strength must be shown to four decimal places. Package prices must equal dosage form prices multiplied by package size. All NDCs identified at the dataset spreadsheet attachment to each drug class information page for each quoted strength and form must be quoted. Company requests for exception to the same price per dosage form unit across package sizes must be submitted in writing to the Contracting Officer not less than 14 calendar days prior to the quote due date. It is within the Government's sole discretion to grant an exception. If an exception is granted by the Government, the Committee's cost evaluation for that dosage form and strength will use the price per dosage form unit from the package size with the highest price per dosage form unit. NOTE: The DoD P&T Committee has excluded most NDCs for hospital unit dose packaging and injectable forms not covered for outpatient use by the TRICARE pharmacy benefit. Written requests to exclude specific NDCs for quoted strength and form, to include supporting data and rationale for the exclusion, must be submitted for receipt by the Contracting Officer no later than 15 calendar days prior to BPA quote due date. The Government will respond to such requests within seven calendar days of receipt. The Government will require companies to quote GSA products on an equal milligram (MG) cost across all NDCs.

BPA price quotes are for the DoD P&T Committee to use in considering the cost of pharmaceutical agents to the Government. Cost to the Government is only one of the factors used by the DoD P&T Committee to evaluate relative cost effectiveness under 32 C.F.R. 199.21(e)(2). BPA price quotes are not binding, unless a BPA is executed by the TMA Contracting Officer as the result of a decision by the Director, TMA, to include a pharmaceutical agent on the Uniform Formulary (which consists of the generic and formulary cost share tiers).

Information about therapeutic classes that the DoD P&T Committee intends to review at upcoming meetings for UF and BCF or ECF recommendations is provided on the DoD P&T Committee Schedule. At each meeting, the DoD P&T Committee also intends to evaluate the relative clinical effectiveness and relative cost effectiveness of pharmaceutical agents that have been newly approved by the FDA in any therapeutic class, and make UF and BCF or ECF recommendations for these agents. Pharmaceutical companies are invited to submit BPA price quotes for these newly approved agents.

The DoD P&T Committee will accept multiple UF BPA quotes only to the extent indicated at each specific drug class page linked to Drug Classes Under Review. The DoD P&T Committee will not accept market share based UF BPA price quotes.

Instructions for Completing a UF VARR Refund Quote

Pharmaceutical companies must use the UF VARR template with the associated UF VARR Appendix to prepare a refund quote, being sure to complete all portions of Paragraph 13 as well as Table 1 in accordance with the information provided in the 'Drug Class Page'. Pharmaceutical companies wishing to submit UF VARR refund quotes for more than one drug must submit a separate, complete, refund quote for each FDA approved molecular entity.

In principle, the UF-VARR outlines a refund expressed as a percentage of the Non Federal Average Price (Non-FAMP). Non-FAMP prices are not publicly available. This calculated 'net of refund' Retail cost will be used along with MTF and TMOP pricing to calculate a weighted-average cost across all three points of service within DoD.

If the specific drug class page linked to Drug Classes Under Review states that multiple UF VARR refund quotes that are contingent upon the number of pharmaceutical agents selected for the UF and/or BCF and/or ECF are required, pharmaceutical companies submitting UF VARR refund quotes must submit a separate, complete, refund quote for each NDC in UF VARR Appendix of the UF VARR template for refund quotes. The Condition Set that applies to a given price quote must be identified in Table 1 of the UF VARR refund price quote.

The details concerning the accrual of TRICARE Retail Pharmacy utilization eligible for refunds, the transfer of utilization data to pharmaceutical companies and payment information are outlined in the "Process and Procedures Guide for Manufacturer Refunds".

UF VARR refund quotes are for the DoD P&T Committee to use in considering the cost of pharmaceutical agents to the Government. Cost to the Government is only one of the factors used by the DoD P&T Committee to evaluate relative cost effectiveness under 32 C.F.R. 199.21(e)(2). UF VARR refund quotes are not binding, unless the Agreement is executed by the TMA as the result of a decision by the Director, TMA, to include a pharmaceutical agent in the Uniform Formulary (generic and formulary cost share tiers only).

Information about therapeutic classes that the DoD P&T Committee intends to review at upcoming meetings for UF and BCF or ECF recommendations is provided on the DoD P&T Committee Schedule. At each meeting, the DoD P&T Committee also intends to evaluate the relative clinical effectiveness and relative cost effectiveness of pharmaceutical agents that have been newly approved by the FDA in any therapeutic class, and make UF and BCF or ECF recommendations for these agents. Pharmaceutical companies are invited to submit UF VARR refund quotes for these newly approved agents.

The DoD P&T Committee will accept multiple UF VARR quotes only to the extent indicated at each specific drug class page linked to Drug Classes Under Review. The DoD P&T Committee will not accept market share based UF VARR refund quotes.

Submitting Quotes and Contact Information

UF BPA Price Quotes

Direct all questions regarding submission of BPA price quotes to the DoD P&T Committee, to the attention of Adrian Blackman, Sr. Contract Analyst, phone 303-676-3716, or email: UF-BPA@tma.osd.mil

TMA Acquisition and Management Support Directorate will receive BPA price quotes. Send all BPA price quotes to:

Adrian Blackman, Sr. Contract Analyst
Contractor; Irving Burton Associates
In Support of: TMA-Aurora/TRICARE AM&S Directorate
16401 East Centretech Pkway
Aurora, CO 80011
303-676-3716

UF VARR Refund Quotes

On behalf of the TMA Pharmacy program office, direct all questions regarding submission of UF VARR refund quotes to the P&T Committee, to the attention of Dr. Dave Meade, phone 210-295-1271, or email: UF-VARR@amedd.army.mil.

TMA Pharmacy Program office will receive UF VARR refund quotes. Send all UF VARR refund quotes to:

Chief, Pharmaceutical Operations
ATTN: UF VARR
TRICARE Management Activity
7700 Arlington Boulevard, Suite 5101
Falls Church, VA 22042-5101


Updates
May 28, 2010 - Original Posting


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