VA Action Stabilizes Prescription Costs for Veterans

by U.S. Medicine

March 10, 2017

By Annette M. Boyle

Late last month, the VA introduced a tiered pharmacy benefit designed to decrease the cost of outpatient medications for most veterans.

SUPERIOR, WI — Late last month, the VA introduced a tiered pharmacy benefit designed to decrease the cost of outpatient medications for most veterans.

The new structure establishes set copayment amounts for different classes of drugs and replaces a previous regulation that would have caused pharmacy prices to rise three times in the next six years, according to the VA.

“The new tiered copayment structure will decrease the costs of outpatient medications for most veterans, aligning with VA’s goals to reduce out-of-pocket costs, encourage greater adherence to prescribed outpatient medications and reduce the risk of fragmented care that results when multiple pharmacies are used to fill veteran prescriptions,” according to the description.

Previously, a calculation based on the prescription drug component of the Medical Consumer Price Index was used to set the copayment amounts for veterans. As those costs rose in the future, so would prescription copayments for veterans, explained Susan A. Reed, VHA’s executive director for revenue operations.

The change eliminated the formula and created three medication tiers for treatment of non-service-connected conditions. Tier 1 includes preferred generics; Tier 2 covers nonpreferred generics and over-the-counter drugs; Tier 3 includes brand-name medications. Medications in Tier 1 have a $5 copay for a 1-30-day supply. Tier 2 and Tier 3 have $8 and $11 copays, respectively.

Under the previous system, nonexempt veterans in Priority Groups (PG) 2-6 paid $8 for all outpatient medications and those in PG 7-8 paid $9 for a month’s supply. Veterans previously exempt from having to make copays will remain exempt.

“Most veterans will receive a savings of $1 to $4 per fill or experience no cost increase under the new policy. Some veterans will have a small $2 to $3 increase for Tier 3 brand-name outpatient medications,” Reed said. The copayment amounts may be reviewed on an annual basis.

The VA established a new $700 limit on copays, as well. Previously, PG 2-6 veterans had a $960 cap, and PG 7-8 veterans had no upper limit at all.

“An annual cap was established to eliminate financial hardship for veterans enrolled in Priority Groups 2 through 8, who might require an unusually large amount of medications,” according to the VA brochure explaining the change.

Still, the VA recognizes that for some veterans, even lower, capped copayment can be too burdensome. The VA will not withhold medications from veterans who cannot pay for their prescriptions but will create an account so they can pay later, if necessary. In addition, veterans with financial difficulties paying for their prescriptions can apply for a waiver, compromise or repayment plan.

Reed said she expects the new structure to benefit the health and finances of many veterans—and the VA. “By lowering copayments and copayment caps, veterans have a higher likelihood to continue with their prescribed medication recommendations made by their VA physicians,” she told U.S. Medicine.

The lowest-cost drugs are used primarily to manage chronic diseases such as hypertension, diabetes and heart disease, in which long-term adherence reduces the risk of progression and complications. Better adherence consequently also reduces the number of associated outpatient and emergency department visits, hospitalizations, tests and procedures.

“With higher copayments and lower adherence, the cost to VA would be higher to care for disease complications, some of which could have been prevented,” she noted.

The new structure closely parallels tiers seen in the private sector and ensures the costs remain competitive and affordable for veterans, according to the agency, which intends for it also to encourage veterans to fill all their prescriptions at a VA pharmacy.

“Veterans will benefit from nonfragmented care by using one pharmacy vs. multiple pharmacies, thereby adhering better to prescribed medications,” Reed said. Filling all medications at the same pharmacy also reduces the risk of drug-drug interactions and adverse effects caused by taking multiple drugs with the same mechanism of action or base ingredients.

Veterans who want to consolidate all their prescriptions at a VA pharmacy can do so, if they meet the following criteria:

  • The veteran must be enrolled in VA health benefits and have a primary care provider.
  • The patient must give their VA provider access to or a copy of their medical records from the non-VA provider who wrote each prescription.
  • The VA provider must agree with the medication prescribed by the non-VA prescriber.

Otherwise, the VA will only fill prescriptions issued by authorized providers within its healthcare system. VA providers have no obligation to prescribe a medication recommended by a non-VA provider, the agency notes.

A number of classes of veterans and medications are exempt from all copayments. Exempt veterans include former prisoners of war, veterans rated 50% or more disabled with a service-connected condition, those with an annual income lower than the applicable VA pension, veterans who are determined to have catastrophic disability and those receiving care for psychosis or certain other mental illnesses.

Medications with no copays required include those dispensed for service-connected conditions or used to treat Vietnam-era herbicide-exposed, radiation-exposed, combat or Camp Lejeune veterans exposed to toxic water supply. Medications for treatment of military sexual trauma and cancer of the head or neck or part of a VA-approved research project also are excluded from copayment requirements.

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