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Pharmacy Benefit Management in the Defense Health Agency

The Defense Health Agency (DHA) within the Department of Defense (DOD) is responsible for managing prescription drug coverage for the over 9.6 million service members, retirees, and their family members under its care. The DHA primarily uses three strategies to manage pharmacy benefits.

  • Formulary management: Through the DHA Pharmacy & Therapeutics (P&T) Committee, a multi-tiered TRICARE Uniform Formulary is developed and maintained. When evaluating new products and conducting class reviews, the P&T Committee considers factors such as clinical effectiveness, product safety, and cost. Beneficiary co-pays for prescriptions vary based the tier the product is assigned on the formulary

  • Utilization management: DHA differentiates pharmacy benefit products from medical benefit products. For oral medications, self-injectable, and other direct-to-patient pharmacy benefit products, the DHA uses the three common types of utilization management techniques: prior authorizations, step therapies, and dispensing quantity limits. Utilization management for physician administered drugs that are typically classified as medical benefit products, however, is more flexible and varies based on DHA policy for each product.

  • Pricing and contracting: The DHA principally orders pharmaceuticals through three purchasing vehicles:

    • Federal Supply Schedules (FSS) are contracts established through the Department of Veteran Affairs. As required by the Veterans Healthcare Act of 1992, all covered drugs are required list their products on the 65 I B FSS for Drugs, Pharmaceuticals, & Hematology Related Products. As one of the “BIG4” agencies, DHA is entitled to that BIG4 reduced price.

    • Blanket Purchase Agreements (BPA) are agreements established directly with DHA. Only available during DOD P&T review, manufactures can propose discount that are separate and additional to any existing contracted Government prices.

    • Distribution and Pricing Agreements (DAPA) are pricing agreements established with Defense Logistics Agency (DLA) via a specific Federal Acquisition Regulation (FAR) authority.

The DHA strives to provide the highest level of care to its beneficiaries. Through the three strategies defined above, it consistently improves the quality and affordability of the its complex pharmacy program. Manufacturers must understand both how to effectively navigate each of the DHA strategies as well as the impact of the DHA decisions with each strategy to ensure optimal product utilization.


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