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Senate Armed Services Subcommittee on Personnel Holds Hearing on Military and Civilian Personnel Programs

By:
Date:
Location: Washington, DC

PRYOR:

    Thank you, Mr. Chairman.

    And I also share in the concerns that Senator Warner just expressed.

    I have a follow up from Senator Dole's question and I don't know which of the three should best handle this, so I'll just sort of throw it out openly -- and that is -- you mentioned prescription drug costs and the high cost of prescription drugs. And in most health care plans in the private sector that seems to be the lead -- the leader in the cost of the -- in the growth cost of those plans. And I'm certain that's true in the military, as well.

    And I'd like to know what you're doing. You mentioned sort of a systematized mail order and more of a systematized retail situation. And it seems to me that we, as the government and as the military, have quite a big of -- bit of bargaining power when it comes to purchasing these drugs. And I'd just like to hear your experience and where you think we're going with that.

WINKENWERDER:

    I mentioned a couple of our key initiatives. There are others. One of the changes that we plan to implement about this year next time will be the institution of a formulary.

PRYOR:

    Yes.

WINKENWERDER:

    And with that, a change in the benefit that creates three tiers -- a generic cost, a brand and then kind of a super brand and with that high end being the one that -- where members would have the most cost sharing for the most expensive...

PRYOR:

    Right.

WINKENWERDER:

    ... drug.

    So those are very important initiatives. The purchasing -- mass purchasing is also very important and right now, as I eluded to, we do joint purchasing with the VA.

PRYOR:

    Yes.

WINKENWERDER:

    And so with our large numbers and their large numbers added in together for a particular drug or a drug class, we get -- we feel like we get very, very good deals. In fact, our prices are probably among the very best anywhere.

PRYOR:

    Yes, I think that's true.

WINKENWERDER:

    So we want to continue that. Our main strategies are the assimilation of a national contract for mail order, retail -- continuing what we think is very good cost and service in our military treatment facilities -- and then the institution of a formulary and a tiered co-payment system.

    If we get all of that done within the next 14 months, we think we'll have put into place the basic building blocks to better control pharmacy costs.

PRYOR:

    Do you think -- and you may not be able to answer this question -- but do you think some of what you're doing may work out in the private sector for, you know, general health insurance plans? Or is the military so -- organized in such a way that it just really doesn't transfer out to the private sector?

WINKENWERDER:

    Well, having just come from the private sector and managing a health plan -- a large health plan in New England, I can tell you what we're trying to do -- what we're trying to do is just what most plans in the private sector -- the well-run plans -- are already doing.

    So -- but, that said, even in spite of all that they're doing, I think they're still struggling to stay up with this -- with this issue.

PRYOR:

    Sure.

WINKENWERDER:

    And new drugs bring great innovations. In some cases they save lives and keep people out of hospitals. On the other hand, where it is possible for a pharmaceutical company to place a very high price on a drug and make that work, they do and they will.

PRYOR:

    Yes.

WINKENWERDER:

    And so we have a number of drugs that are very expensive today. And I think we've also learned that -- just sort of to push advertising out into -- to everybody is effective in causing people to want to go to their doctor and get a drug to treat something. In some cases that's needed, in other cases, it's probably -- it's probably not needed.

PRYOR:

    Right.

WINKENWERDER:

    Part of our program, also, is to educate doctors in terms of cost effective prescribing and also to educate our own service members in terms of things that they can -- that they can get more cheaply for the same cost or lower.

PRYOR:

    Do you -- internally with the people that access the program -- or do you push generics with them?

WINKENWERDER:

    Absolutely -- absolutely do.

PRYOR:

    Yes. And do you -- do you feel like even with the new drugs that are coming on line that are much more expensive -- some are much more expensive, not all -- but for those that are much more expensive, do you still feel like you're getting the best or about the best price you can possibly get for those?

WINKENWERDER:

    We are in our military treatment facilities. We have that authority in law to extend that both to our retail and the -- and the mail order. But the actual transition to using that pricing power awaits the transition of this whole program. It takes quite a lot of work to set these...

PRYOR:

    Right.

WINKENWERDER:

    ... national contracts up, but when they go into effect, we plan to use that pricing power.

PRYOR:

    Great.

    Secretary Chu, did you have something to add? You were kind of -- looked like you were about to say something there a minute ago.

CHU:

    Yes. I realize that some of this will be a change for some of our military members in terms of how we do things. We think this is necessary in order to get people to the right drug for their disease problem. As Dr. Winkenwerder indicates, the advertising may sometimes lead you to something that's inappropriate -- you may have side effects that aren't really the best for your particular case. We do review the -- established (ph) for (ph) this formulary is the product of a review by our best minds, in terms of what's the right drug for your problem. And I think channeling our patients into the right place is ultimately our objective because in the end, it's their health care status we care most about.

PRYOR:

    Right.

    That's all I have, Mr. Chairman.

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