
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document affected by Public Law 107-107 Section 1048(c)(4)]
[Document affected by Public Law 107-107 Section 723]
[CITE: 10USC1074g]

 
                         TITLE 10--ARMED FORCES
 
                    Subtitle A--General Military Law
 
                           PART II--PERSONNEL
 
                   CHAPTER 55--MEDICAL AND DENTAL CARE
 
Sec. 1074g. Pharmacy benefits program

    (a) Pharmacy Benefits.--(1) The Secretary of Defense, after 
consulting with the other administering Secretaries, shall establish an 
effective, efficient, integrated pharmacy benefits program under this 
chapter (hereinafter in this section referred to as the ``pharmacy 
benefits program'').
    (2)(A) The pharmacy benefits program shall include a uniform 
formulary of pharmaceutical agents, which shall assure the availability 
of pharmaceutical agents in the complete range of therapeutic classes. 
The selection for inclusion on the uniform formulary of particular 
pharmaceutical agents in each therapeutic class shall be based on the 
relative clinical and cost effectiveness of the agents in such class.
    (B) In considering the relative clinical effectiveness of agents 
under subparagraph (A), the Secretary shall presume inclusion in a 
therapeutic class of a pharmaceutical agent, unless the Pharmacy and 
Therapeutics Committee established under subsection (b) finds that a 
pharmaceutical agent does not have a significant, clinically meaningful 
therapeutic advantage in terms of safety, effectiveness, or clinical 
outcome over the other drugs included on the uniform formulary.
    (C) In considering the relative cost effectiveness of agents under 
subparagraph (A), the Secretary shall rely on the evaluation by the 
Pharmacy and Therapeutics Committee of the costs of agents in a 
therapeutic class in relation to the safety, effectiveness, and clinical 
outcomes of such agents.
    (D) The Secretary shall establish procedures for the selection of 
particular pharmaceutical agents for the uniform formulary. Such 
procedures shall be established so as best to accomplish, in the 
judgment of the Secretary, the objectives set forth in paragraph (1). No 
pharmaceutical agent may be excluded from the uniform formulary except 
upon the recommendation of the Pharmacy and Therapeutics Committee. The 
Secretary shall begin to implement the uniform formulary not later than 
October 1, 2000.
    (E) Pharmaceutical agents included on the uniform formulary shall be 
available to eligible covered beneficiaries through--
        (i) facilities of the uniformed services, consistent with the 
    scope of health care services offered in such facilities;
        (ii) retail pharmacies designated or eligible under the TRICARE 
    program or the Civilian Health and Medical Program of the Uniformed 
    Services to provide pharmaceutical agents to covered beneficiaries; 
    or
        (iii) the national mail-order pharmacy program.

    (3) The pharmacy benefits program shall assure the availability of 
clinically appropriate pharmaceutical agents to members of the armed 
forces, including, where appropriate, agents not included on the uniform 
formulary described in paragraph (2).
    (4) The pharmacy benefits program may provide that prior 
authorization be required for certain pharmaceutical agents to assure 
that the use of such agents is clinically appropriate.
    (5) The pharmacy benefits program shall assure the availability to 
eligible covered beneficiaries of pharmaceutical agents not included on 
the uniform formulary. Such pharmaceutical agents shall be available 
through at least one of the means described in paragraph (2)(E) under 
terms and conditions that may include cost sharing by the eligible 
covered beneficiary in addition to any such cost sharing applicable to 
agents on the uniform formulary.
    (6) The Secretary, in the regulations prescribed under subsection 
(g), may establish cost sharing requirements (which may be established 
as a percentage or fixed dollar amount) under the pharmacy benefits 
program for generic, formulary, and nonformulary agents. For 
nonformulary agents, cost sharing shall be consistent with common 
industry practice and not in excess of amounts generally comparable to 
20 percent for beneficiaries covered by section 1079 of this title or 25 
percent for beneficiaries covered by section 1086 of this title.
    (7) The Secretary shall establish procedures for eligible covered 
beneficiaries to receive pharmaceutical agents that are not included on 
the uniform formulary but that are considered to be clinically 
necessary. Such procedures shall include peer review procedures under 
which the Secretary may determine that there is a clinical justification 
for the use of a pharmaceutical agent that is not on the uniform 
formulary, in which case the pharmaceutical agent shall be provided 
under the same terms and conditions as an agent on the uniform 
formulary. Such procedures shall also include an expeditious appeals 
process for an eligible covered beneficiary, or a network or uniformed 
provider on behalf of the beneficiary, to establish clinical 
justification for the use of a pharmaceutical agent that is not on the 
uniform formulary.
    (8) In carrying out this subsection, the Secretary shall ensure that 
an eligible covered beneficiary may continue to receive coverage for any 
maintenance pharmaceutical that is not on the uniform formulary and that 
was prescribed for the beneficiary before the date of the enactment of 
this section and stabilized the medical condition of the beneficiary.
    (b) Establishment of Committee.--(1) The Secretary of Defense shall, 
in consultation with the Secretaries of the military departments, 
establish a Pharmacy and Therapeutics Committee for the purpose of 
developing the uniform formulary of pharmaceutical agents required by 
subsection (a), reviewing such formulary on a periodic basis, and making 
additional recommendations regarding the formulary as the committee 
determines necessary and appropriate. The committee shall include 
representatives of pharmacies of the uniformed services facilities, 
contractors responsible for the TRICARE retail pharmacy program, 
contractors responsible for the national mail-order pharmacy program, 
providers in facilities of the uniformed services, and TRICARE network 
providers. Committee members shall have expertise in treating the 
medical needs of the populations served through such entities and in the 
range of pharmaceutical and biological medicines available for treating 
such populations. The committee shall function under procedures 
established by the Secretary under the regulations prescribed under 
subsection (g).
    (2) Not later than 90 days after the establishment of the Pharmacy 
and Therapeutics Committee by the Secretary, the committee shall convene 
to design a proposed uniform formulary for submission to the Secretary. 
After such 90-day period, the committee shall meet at least quarterly 
and shall, during meetings, consider for inclusion on the uniform 
formulary under the standards established in subsection (a) any drugs 
newly approved by the Food and Drug Administration.
    (c) Advisory Panel.--(1) Concurrent with the establishment of the 
Pharmacy and Therapeutics Committee under subsection (b), the Secretary 
shall establish a Uniform Formulary Beneficiary Advisory Panel to review 
and comment on the development of the uniform formulary. The Secretary 
shall consider the comments of the panel before implementing the uniform 
formulary or implementing changes to the uniform formulary.
    (2) The Secretary shall determine the size and membership of the 
panel established under paragraph (1), which shall include members that 
represent nongovernmental organizations and associations that represent 
the views and interests of a large number of eligible covered 
beneficiaries.
    (d) Procedures.--(1) In the operation of the pharmacy benefits 
program under subsection (a), the Secretary of Defense shall assure 
through management and new contractual arrangements that financial 
resources are aligned such that the cost of prescriptions is borne by 
the organization that is financially responsible for the health care of 
the eligible covered beneficiary.
    (2) Effective not later than April 5, 2000, the Secretary shall use 
a modification to the bid price adjustment methodology in the current 
managed care support contracts to ensure equitable and timely 
reimbursement to the TRICARE managed care support contractors for 
pharmaceutical products delivered in the nonmilitary environments. The 
methodology shall take into account the ``at-risk'' nature of the 
contracts as well as managed care support contractor pharmacy costs 
attributable to changes to pharmacy service or formulary management at 
military medical treatment facilities, and other military activities and 
policies that affect costs of pharmacy benefits provided through the 
Civilian Health and Medical Program of the Uniformed Services. The 
methodology shall also account for military treatment facility costs 
attributable to the delivery of pharmaceutical products in the military 
facility environment which were prescribed by a network provider.
    (e) Pharmacy Data Transaction Service.--The Secretary of Defense 
shall implement the use of the Pharmacy Data Transaction Service in all 
fixed facilities of the uniformed services under the jurisdiction of the 
Secretary, in the TRICARE retail pharmacy program, and in the national 
mail-order pharmacy program.
    (f) Definitions.--In this section:
        (1) The term ``eligible covered beneficiary'' means a covered 
    beneficiary for whom eligibility to receive pharmacy benefits 
    through the means described in subsection (a)(2)(E) is established 
    under this chapter or another provision of law.
        (2) The term ``pharmaceutical agent'' means drugs, biological 
    products, and medical devices under the regulatory authority of the 
    Food and Drug Administration.

    (g) Regulations.--The Secretary of Defense shall, after consultation 
with the other administering Secretaries, prescribe regulations to carry 
out this section.

(Added Pub. L. 106-65, div. A, title VII, Sec. 701(a)(1), Oct. 5, 1999, 
113 Stat. 677; amended Pub. L. 106-398, Sec. 1 [[div. A], title X, 
Sec. 1087(a)(5)], Oct. 30, 2000, 114 Stat. 1654, 1654A-290.)

                       References in Text

    The date of the enactment of this section, referred to in subsec. 
(a)(8), is the date of enactment of Pub. L. 106-65, which was approved 
Oct. 5, 1999.


                               Amendments

    2000--Subsec. (a)(6). Pub. L. 106-398, Sec. 1 [[div. A], title X, 
Sec. 1087(a)(5)(A)], substituted ``in the regulations prescribed'' for 
``as part of the regulations established''.
    Subsec. (a)(7). Pub. L. 106-398, Sec. 1 [[div. A], title X, 
Sec. 1087(a)(5)(B)], substituted ``that are not included on the uniform 
formulary but that are'' for ``not included on the uniform formulary, 
but,''.
    Subsec. (b)(1). Pub. L. 106-398, Sec. 1 [[div. A], title X, 
Sec. 1087(a)(5)(C)], substituted ``prescribed under'' for ``required 
by'' in last sentence.
    Subsec. (d)(2). Pub. L. 106-398, Sec. 1 [[div. A], title X, 
Sec. 1087(a)(5)(D)], substituted ``Effective not later than April 5, 
2000, the Secretary shall use'' for ``Not later than 6 months after the 
date of the enactment of this section, the Secretary shall utilize''.
    Subsec. (e). Pub. L. 106-398, Sec. 1 [[div. A], title X, 
Sec. 1087(a)(5)(E)], substituted ``The'' for ``Not later than April 1, 
2000, the'' and inserted ``in'' before ``the TRICARE'' and before ``the 
national''.
    Subsec. (f). Pub. L. 106-398, Sec. 1 [[div. A], title X, 
Sec. 1087(a)(5)(F)], substituted ``In this section:'' for ``As used in 
this section--'' in introductory provisions, ``The term'' for ``the 
term'' in pars. (1) and (2), and a period for ``; and'' at end of par. 
(1).
    Subsec. (g). Pub. L. 106-398, Sec. 1 [[div. A], title X, 
Sec. 1087(a)(5)(G)], substituted ``prescribe'' for ``promulgate''.


                     Termination of Advisory Panels

    Advisory panels established after Jan. 5, 1973, to terminate not 
later than the expiration of the 2-year period beginning on the date of 
their establishment, unless, in the case of a panel established by the 
President or an officer of the Federal Government, such panel is renewed 
by appropriate action prior to the expiration of such 2-year period, or 
in the case of a panel established by Congress, its duration is 
otherwise provided for by law. See sections 3(2) and 14 of Pub. L. 92-
463, Oct. 6, 1972, 86 Stat. 770, 776, set out in the Appendix to Title 
5, Government Organization and Employees.


                 Deadline for Establishment of Committee

    Pub. L. 106-65, div. A, title VII, Sec. 701(b), Oct. 5, 1999, 113 
Stat. 680, provided that: ``Not later than 30 days after the date of the 
enactment of this Act [Oct. 5, 1999], the Secretary shall establish the 
Pharmacy and Therapeutics Committee required by section 1074g(b) of 
title 10, United States Code.''


                            Reports Required

    Pub. L. 106-65, div. A, title VII, Sec. 701(c), Oct. 5, 1999, 113 
Stat. 680, provided that: ``Not later than April 1 and October 1 of 
fiscal years 2000 and 2001, the Secretary of Defense shall submit to 
Congress a report on--
        ``(1) implementation of the uniform formulary required under 
    subsection (a) of section 1074g of title 10, United States Code (as 
    added by subsection (a));
        ``(2) the results of a confidential survey conducted by the 
    Secretary of prescribers for military medical treatment facilities 
    and TRICARE contractors to determine--
            ``(A) during the most recent fiscal year, how often 
        prescribers attempted to prescribe non-formulary or non-
        preferred prescription drugs, how often such prescribers were 
        able to do so, and whether covered beneficiaries were able to 
        fill such prescriptions without undue delay;
            ``(B) the understanding by prescribers of the reasons that 
        military medical treatment facilities or civilian contractors 
        preferred certain pharmaceuticals to others; and
            ``(C) the impact of any restrictions on access to non-
        formulary prescriptions on the clinical decisions of the 
        prescribers and the aggregate cost, quality, and accessibility 
        of health care provided to covered beneficiaries;
        ``(3) the operation of the Pharmacy Data Transaction Service 
    required by subsection (e) of such section 1074g; and
        ``(4) any other actions taken by the Secretary to improve 
    management of the pharmacy benefits program under such section.''


 Study for Design of Pharmacy Benefit for Certain Covered Beneficiaries

    Pub. L. 106-65, div. A, title VII, Sec. 701(d), Oct. 5, 1999, 113 
Stat. 680, provided that:
    ``(1) Not later than April 15, 2001, the Secretary of Defense shall 
prepare and submit to Congress--
        ``(A) a study on a design for a comprehensive pharmacy benefit 
    for covered beneficiaries under chapter 55 of title 10, United 
    States Code, who are entitled to benefits under part A, and enrolled 
    under part B, of title XVIII of the Social Security Act [42 U.S.C. 
    1395c et seq., 1395j et seq.]; and
        ``(B) an estimate of the costs of implementing and operating 
    such design.
    ``(2) The design described in paragraph (1)(A) shall incorporate the 
elements of the pharmacy benefits program required to be established 
under section 1074g of title 10, United States Code (as added by 
subsection (a)).''
