Express Scripts' Tricare Pharmacy Contract Could Be Costing Military Families Money, Lawmakers Warn

Pharmacy at Davis-Monthan Air Force
A pharmacy technician pulls medication from storage in the Exchange Pharmacy at Davis-Monthan Air Force Base, Ariz., May 23, 2023. (U.S. Air Force photo by Staff Sgt. Abbey Rieves)

Two dozen Democrat and Republican lawmakers have raised issues about Express Scripts, the company that oversees the U.S. military's pharmacy program, charging that the benefits manager engages in tactics that squelch competition and raise prices.

The lawmakers, led by Sen. Elizabeth Warren, D-Mass., and Sen. Mike Rounds, R-S.D., wrote Defense Department leadership last week questioning the DoD's sole-source contract with Express Scripts, which manages the Tricare retail pharmacy network and prescription home delivery programs.

They said Express Scripts, which has overseen Tricare pharmacy operations since 2009 and was awarded an eight-year contract in 2021 worth up to $4.3 billion, has used its power to strong-arm independent pharmacies and steer Tricare patients to its own mail-order companies.

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The results, they said, are fewer options for military personnel and family members and higher costs.

"We believe DHA's exclusive contract with Express Scripts may be harming Tricare beneficiaries, independent pharmacies, and American taxpayers," they wrote in a letter June 26 to Assistant Secretary of Defense for Health Affairs Dr. Lester Martinez-Lopez and Defense Health Agency Director Lt. Gen. Telita Crosland. "[Express Scripts'] anti-competitive gaming is particularly evident in Tricare."

    Insurance giant Cigna acquired Express Scripts, the country's second-largest pharmacy benefits manager, in 2018 for $67 billion. Express Scripts oversees a Tricare retail pharmacy network of roughly 42,000 stores, including 12,000 independent pharmacies; in addition, it operates its own mail-order pharmacy, ESI, and uses Accredo, a Cigna-owned company, to provide specialty mail-order pharmacy services to Tricare patients with complex or chronic diseases.

    According to the legislators, when Express Scripts extended a new contract to independent pharmacies in 2022, nearly 15,000 outlets left the network as a result of contract terms that the legislators described as "usurious," which refers to the act of charging what are perceived to be exorbitant rates.

    While at least 5,000 returned months later under renegotiated contracts, the change forced 400,000 beneficiaries to find a new pharmacy or use Express Scripts and Accredo by mail, they said.

    "This exodus of independent and retail pharmacies can be catastrophic for Tricare beneficiaries, especially those with complex medical conditions who are ill-served by mail-order pharmacies," the lawmakers wrote.

    In a statement, officials for Express Scripts said that Accredo and ESI home delivery pharmacies have accuracy rates of nearly 100% and are considered "best in class pharmacies," with Accredo having a 94% satisfaction rate among Tricare beneficiaries.

    "Express Scripts proudly provides Tricare beneficiaries with high-quality, affordable health care while achieving billions of dollars in savings for the government and the taxpayers," Express Scripts officials said in a statement to "Tricare beneficiaries have access to the full range of generic, brand, and specialty medications on the market today through our robust network of chain, independent, military, specialty and home delivery pharmacies."

    But the lawmakers say Express Scripts has a history of price-gouging and raised concerns that this may include the U.S. government. They cited several media investigations that found Express Scripts charged commercial insurance companies 27 times more for some generic specialty drugs through Accredo; in West Virginia, it was accused of charging 100 times the amount.

    "We are concerned that Express Scripts may be employing these same tactics to overcharge Tricare -- a taxpayer-funded program -- for drugs dispensed at Accredo, leveraging its Tricare contract to underpay competitors and overpay its related companies," they wrote.

    In their letter, the lawmakers asked the DoD for details on the contract and the Tricare pharmacy network, to include the number of outlets in the network both currently and dating back to 2009; how it verifies that Express Scripts has adequate retail pharmacy coverage that meet standards; whether it has compared costs of medications through Accredo; and more.

    In its statement, Express Scripts said beneficiaries are not required to fill their specialty prescriptions through Accredo and, during one recent month, filled those prescriptions at nearly 850 pharmacies.

    But many prefer the services of Accredo, it added.

     "Many choose to because of the highly personalized support they receive from their pharmacists, nurses, clinicians, dieticians and social workers," officials said.

    Lawmakers gave the DoD until July 2 to respond. They also copied DoD Inspector General Robert Storch on the correspondence.

    Defense Health Agency officials declined to comment on the letter. Spokesman Peter Graves said doing so would be "premature ... until we have responded formally."

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