Promoting high quality, cost effective drug therapy throughout the Military Health System Breaking Down Silos in Search of Value CAPT Mark A. Richerson, MSC, USN Director, Department of Defense Pharmacoeconomic Center

DoD Pharmacoeconomic Center 2 Objectives Define “Value” and impact of Military Treatment Facilities Discuss silos affecting delivery of DoD Prescription Benefit Discuss the role of conference attendees "Breaking Down Silos to Enhance the Value of the Pharmacy Benefit Across the MHS"

DoD Pharmacoeconomic Center 3 Evidence Based Medicine Approach to health care practice in which the clinician is aware of the evidence in support of his/her clinical practice, and the strengths of that evidence - McMaster University The conscientious, explicit, and judicious use of current best evidence in making decisions about the care of individual patients - BMJ 312:71-2

DoD Pharmacoeconomic Center 4 The Search for Value Less Costly, More Effective More Costly, More Effective More Costly, Less Effective Less Costly, Less Effective The Cost Effectiveness Plane Effectiveness Cost Vytorin & Pravachol The Cost Effectiveness Judgment Nirvana! Non Formulary! Simvastatin (Zocor) Effectiveness Cost

DoD Pharmacoeconomic Center 5 TRICARE Eligible Beneficiaries Monthly Average, FY06 Retirees & Family Members < 65 Other >1% Retirees & Family Members ≥ 65 Active Duty Family Members Active Duty 1.8M 2.3M 3.2M 25% 36% 19% 9.2 Million FY05 FY Million FY MillionFY MillionFY02 Source: M2

DoD Pharmacoeconomic Center 6 Unique Users - Point of Service All Ages, FY05 to FY06 Source: PDTS Unique Users FY05 = 6.6M FY06 = 6.7M Retail 46% 19% 28% Mail Order 4% 1% MTF 2% 1% 42% FY0630% FY06 5%

DoD Pharmacoeconomic Center day Equivalent Rxs By POS, Oct 00 – Sep 06 Source: USPD, PDTS

DoD Pharmacoeconomic Center 8 $ in millions Sources: PDTS and Prime Vendor MHS Outpatient Drug Spend FY02FY03FY04FY05FY06 MTF$1,388 $1,565 ( 12.7%) $1,704 (  8.9%) $1,615 ( ↓ 5.2%) $1,536 ( ↓ 4.9%) Retail$1,278 $1,847 ( 44.6%) $2,430 (  31.6%) $3,162 (  30.1%) $3,912 (  23.8%) Mail Order $347 $429 (  23.4%) $546 (  27.3%) $629 (  15.2) $718 (  14.2) Total$3,013 $3,841 (  27.5%) $4,680 (  21.8%) $5,406 (  15.5%) $6,166 (  14.1%) Cost per Beneficiary $347 $430 (  23.9%) $511 (  18.9%) $587 (  14.8%) $672 (  14.5%)

DoD Pharmacoeconomic Center 9 Class Review & Implementation Tracking Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 PPIs ARBs PDE-5s AF-DERMs MS-DMDs CCBs ACEs BPH-ABs M/Ks NCSs ALZs AD1s GABAs OABs MiscHTNs EMETs BCs LIP1s TZDs Nov-06 Dec-06Jan-07Feb-07 H2s ADHDs SED2s

DoD Pharmacoeconomic Center 10 NF/3 rd Tier 30dRxs MTFs, All Implemented UF Classes

DoD Pharmacoeconomic Center 11 "Breaking Down Silos to Enhance the Value of the Pharmacy Benefit Across the MHS" What Silos?

DoD Pharmacoeconomic Center 12

DoD Pharmacoeconomic Center 13 Stakeholders in the MHS Pharmacy Benefit Patients/Beneficiaries Clinicians Policy makers Congress Resource Managers Industry

DoD Pharmacoeconomic Center 14 Patient Policy Maker Congress Clinician Industry Resource Manager Aerial View of Rx Benefit Silos

DoD Pharmacoeconomic Center 15 Pharmacy Cost Trend Components FY02- FY03 FY03- FY04 FY04- FY05 FY05- FY06 Change in Prevalence % Beneficiaries Using the Pharmacy Benefit 5.2%0.7%2.9%1.5% Change in Intensity 30 day Equivalent Rxs per User 6.3% 6.8%5.6% Price inflation Weighted % Change in price of Drugs 5.5%6.7%5.9%4.2% Mix/New Drugs Change in drug mix and new drug usage 5.1%4.0%-1.4%2.6% % Change in Average Cost per Beneficiary per Year 23.8%18.9%14.8%14.5% Sources: M2, PDTS, and Prime Vendor data

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DoD Pharmacoeconomic Center 18  Take advantage of this opportunity to better understand various stakeholder perspectives.  Ask questions and share what you learn with others.  Know the significant role you play in sustaining this premier, clinically sound, and cost effective benefit. Take Away Message:

Promoting high quality, cost effective drug therapy throughout the Military Health System