Breaking Down Silos in Search of Value

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

2DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil

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"


Evidence Based Medicine

Approach to health care practice in which the clinician isaware 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 bestevidence in making decisions about the care of individualpatients

- BMJ 312:71-2


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

Co

stVytorin & Pravachol

The Cost Effectiveness Judgment

Nirvana!

Non Formulary!

Simvastatin

(Zocor)

Effectiveness

Co

st


TRICARE Eligible BeneficiariesMonthly Average, FY06

Retirees & Family Members < 65

Other >1%

Retirees & Family Members ≥ 65

Active Duty Family Members

Active Duty

1.8M 1.8M

2.3M3.2M 25%36%

19% 19%

9.2 Million

9.2 Million

FY05

FY06

9.1 MillionFY04

8.9 MillionFY03

8.6 MillionFY02

Source: M2


Unique Users - Point of ServiceAll Ages, FY05 to FY06

Source: PDTS

Unique Users FY05 = 6.6M

FY06 = 6.7M

Retail46% 19% 28%

Mail Order

4%1%MTF

2%

1%

42% FY06 30% FY06

5%


30-day Equivalent Rxs By POS, Oct 00 – Sep 06

Source: USPD, PDTS

30d

EQ

Rxs

(M

illio

ns)

MTF

Mail Order

FY01 FY02 FY03 FY04

Retail

FY05 FY060

2

4

6

8

10

12

14

16

18

20

22

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

TSRxApr 01

Apr 2001MTF 76%Retail 14% Mail Order 10%

Sep 2006MTF 49%Retail 37%Mail Order 14%


$ in millions

Sources: PDTS and Prime Vendor

MHS Outpatient Drug Spend

FY02 FY03 FY04 FY05 FY06

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%)


Class Review & Implementation TrackingO

ct-

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PPIs

ARBs

PDE-5s

AF-DERMs

MS-DMDs

CCBs

ACEs

BPH-ABs

M/Ks

NCSs

ALZs

AD1s

GABAs

OABs

MiscHTNs

EMETs

BCs

LIP1s

TZDs

No

v-0

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n-0

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b-0

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H2s

ADHDs

SED2s


NF/3rd Tier 30dRxsMTFs, All Implemented UF Classes

ACEs

AD1s

BPH-ABs

CCBs

PDE-5s

0

20,000

40,000

60,000

80,000

100,000

120,0003

1-O

ct-

04

30

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v-0

4

31

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6


"Breaking Down Silos to Enhance the Value of the Pharmacy Benefit Across the MHS"

What Silos?


Stakeholders in the MHS Pharmacy Benefit

• Patients/Beneficiaries

• Clinicians

• Policy makers

• Congress

• Resource Managers

• Industry


Patient

Policy Maker

Congress

Clinician

Industry

ResourceManager

Aerial View of Rx Benefit Silos


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% 6.3% 6.8% 5.6%

Price inflationWeighted % Change in price of Drugs

5.5% 6.7% 5.9% 4.2%

Mix/New DrugsChange 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


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

www.pec.ha.osd.mil

Breaking Down Silos in Search of Value

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