[Federal Register Volume 80, Number 143 (Monday, July 27, 2015)]
[Rules and Regulations]
[Pages 44269-44274]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-18290]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

[Docket ID: DOD-2012-HA-0049]
RIN 0720-AB57


Civilian Health and Medical Program of the Uniformed Services 
(CHAMPUS)/TRICARE: TRICARE Pharmacy Benefits Program

AGENCY: Office of the Secretary, Department of Defense (DoD).

ACTION: Final rule.

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SUMMARY: This final rule implements new authority for an over-the-
counter (OTC) drug program, makes several administrative changes to the 
TRICARE Pharmacy Benefits Program regulation in order to conform it to 
the statute, and clarifies some procedures regarding the operation of 
the uniform formulary. Specifically, the final rule: Provides 
implementing regulations for the OTC drug program that has recently 
been given permanent statutory authority; conforms the pharmacy program 
regulation to the statute (including recent statutory changes contained 
in the Carl Levin and Howard P. ``Buck'' McKeon National Defense 
Authorization Act for Fiscal Year 2015) regarding point-of-service 
availability of non-formulary drugs and copayments for all categories 
of drugs; clarifies the process for formulary placement of newly 
approved drugs; and clarifies several other uniform formulary 
practices.

DATES: This final rule is effective August 26, 2015.

FOR FURTHER INFORMATION CONTACT: Dr. George E. Jones, Jr., Chief, 
Pharmacy Operations Division, Defense Health Agency, telephone 703-681-
2890.

SUPPLEMENTARY INFORMATION:

A. Executive Summary

1. Purpose of Regulatory Action

    The final rule is necessary to incorporate new statutory authority 
for a permanent OTC program, make several administrative changes to the 
TRICARE Pharmacy Benefits Program regulation to conform to the statute 
(10 U.S.C. 1074g), and clarify some procedures regarding the uniform 
formulary.
    Legal authority for this final rule is 10 U.S.C. 1074g.

2. Summary of the Final Rule

    a. It establishes the process for identifying select OTC products 
for coverage under the pharmacy benefit program and the rules for 
making these products available to eligible DoD beneficiaries under the 
new authority enacted in section 702 of the National Defense 
Authorization Act for Fiscal Year 2013 (NDAA-13). In general, approved 
OTC pharmaceuticals will comply with the mandatory generic policy as 
stated in 32 CFR 199.21(j)(2) and will be available under terms similar 
to generic prescription medications, except that the need for a 
prescription and/or a copay may be waived in some circumstances.
    b. It conforms the regulation to the statute regarding the point of 
service where non-formulary drugs are available. They would be 
generally available in the mail order program, except that if validated 
as medically necessary, they would be available from military treatment 
facility pharmacies and from retail pharmacies (at the formulary copay 
level) as well.
    c. It clarifies the process for formulary placement of newly 
approved innovator drugs brought to market under a New Drug Application 
approved by the Food and Drug Administration (FDA), giving the Pharmacy 
and Therapeutics Committee up to 120 days to recommend tier placement 
on the uniform formulary. During this period, new drugs would be 
assigned a classification pending status; they would be available under 
terms comparable to non-formulary drugs, unless medically necessary, in 
which case they would be available under terms comparable to formulary 
drugs.
    d. As a ``housekeeping'' change, it conforms the rule to the new 
statutory specifications for copayment amounts in 10 U.S.C 1074g.

3. Costs and Benefits

    The benefits of this final rule are that it will more closely 
conform the regulation to the statute and facilitate more effective 
administration of the

[[Page 44270]]

TRICARE Pharmacy Benefits Program. The final rule will provide savings 
to the Department of a low-end estimate of $18.4 million and the high-
end estimate of $26 million per year based on OTC program savings and 
estimated potential savings resulting from being able to offer non-
formulary drugs through the most cost-effective venue. Revenue from 
implementation of copay changes resulting from statutory changes 
contained in the Carl Levin and Howard P. ``Buck'' McKeon National 
Defense Authorization Act for Fiscal Year 2015 is a low end estimate of 
$183.1 million annually and a high end estimate for $198.7 million 
annually. With respect to these statutory changes, this rule simply 
makes ``housekeeping'' amendments to conform to the specific statutory 
requirements. DoD has no administrative discretion on this matter.

B. Background

    In 1999, Congress enacted 10 U.S.C. 1074g to, among other things, 
establish a uniform formulary program to incentivize the use of more 
cost-effective pharmaceutical agents and points of service. There are 
four points of service under the Pharmacy Benefits Program--military 
facility pharmacies, retail network pharmacies, retail non-network 
pharmacies, and the TRICARE mail order pharmacy program (TMOP)--and 
three uniform formulary tiers--First Tier for generic drugs, Second 
Tier for preferred brand name drugs (also referred to as ``formulary 
drugs''), and Third Tier for non-preferred brand name drugs (also 
referred to as ``non-formulary drugs''). In addition to establishing 
procedures for assigning drugs to one of the three tiers, the statute 
includes several other specifications, including that formulary drugs 
are generally available in all three points of service. Until very 
recently, the statute also provided that non-formulary drugs would be 
available in at least one point of service. TRICARE's regulations 
implementing this statute, issued in 2004, established or continued 
prior rules for, among other things: Assigning drugs to a formulary 
tier based on clinical and cost-effectiveness, and point of service 
availability for the respective tiers. Although the statute required 
Third Tier drugs to be available in only one point of service, the 
regulations made them available in two. Under section 702 of the Carl 
Levin and Howard P. ``Buck'' McKeon National Defense Authorization Act 
for Fiscal Year 2015 (NDAA-15), non-formulary drugs are now generally 
limited to the mail order pharmacy point of service (unless there is a 
validated medical necessity for the drug).
    TRICARE's administration of the Pharmacy Benefits Program has 
achieved some improvements in cost-effectiveness through the retail 
refund program, increased utilization of formulary management tools 
such as step-therapy and prior authorizations, and increased copays. 
The final rule will provide savings to the Department of a low-end 
estimate of $18.4 million and the high-end estimate of $26 million per 
year based on a combination of the savings from the current OTC 
demonstration program and estimated potential savings resulting from 
being able to offer non-formulary drugs through the most cost-effective 
venue. Revenue from implementation of copay changes resulting from 
statutory changes contained in the Carl Levin and Howard P. ``Buck'' 
McKeon National Defense Authorization Act for Fiscal Year 2015 is a low 
end estimate of $183.1 million annually and a high end estimate for 
$198.7 million annually. As a ``housekeeping'' matter, this rule 
includes the necessary changes to conform to the new statutory 
specifications over which DoD has no administrative discretion. 
However, overall costs of the TRICARE Pharmacy Benefits Program have 
continued to increase substantially, from approximately $2 billion in 
fiscal year 2001, to approximately $7 billion for fiscal year 2012. 
Like other large health plans, DoD is experiencing rising pharmacy 
costs due to new expensive products, shorter hospital stays, and in 
some cases higher drug prices. DoD also has an expanded beneficiary 
population, which now includes ``TRICARE-for-Life'' beneficiaries and 
some members of the Selected Reserves and their families. Retail 
prescription co-payments reflect the cost for up to a 30-day supply of 
the prescription, while mail order co-payments cover up to a 90-day 
supply. This difference is part of the incentive for beneficiaries to 
use the more cost-effective mail order program, as is the recent 
elimination of copayments for mail order generic drugs. Encouraging 
increased use of DoD's more cost-effective points of service (i.e., the 
mail order pharmacy or a military treatment facility pharmacy) and more 
cost-effective pharmaceutical products (i.e., those on First Tier and 
Second Tier) continues to be a TRICARE program objective.

C. Summary of the Final Rule

    This final rule establishes the process for selecting OTC products 
for coverage under the TRICARE pharmacy benefits program and would 
provide the guidelines for making selected OTC products available to 
eligible DoD beneficiaries. The OTC drugs demonstration project began 
through the TRICARE Mail Order Pharmacy program in May 2007 and in the 
TRICARE Retail Pharmacy program in October 2007. Due to the brevity of 
the demonstration, particularly in the retail pharmacy venue, in June 
2009 an interim report to Congress was submitted with preliminary cost 
savings estimates and positive beneficiary feedback. In order to 
validate the initial results and identify areas for improvement to the 
program, the Department of Defense (DoD) extended the program through a 
Federal Register notice published on December 16, 2009. The 
demonstration program was due to terminate November 4, 2012. The DoD 
extended the OTC demonstration for another 2 years through publishing a 
Federal Register notice, while awaiting permanent legislative 
authority. A report to Congress in 2012 stated that DoD saved 
approximately $62M during the course of the OTC demo. Section 702 of 
NDAA-13 amended subsection (a)(2) of section 1074g of title 10, United 
States Code, providing permanent authority to place selected over-the-
counter drugs on the uniform formulary.
    The new legislation authorizes DoD to place selected OTC drugs on 
the uniform formulary and make such drugs available to eligible covered 
beneficiaries (eligibility specified in 32 CFR 199.3). The basic 
criteria regarding selection of OTC products for consideration are 
cost-effectiveness and patient access. DoD will consider and approve an 
OTC drug for inclusion in the uniform formulary only if it is expected 
to reduce government costs relative to a clinically comparable 
alternative drug that would otherwise be consumed and/or if an OTC 
product provided access to care not otherwise met by prescription-only 
products (e.g., Plan B contraceptive). An OTC drug may be included on 
the uniform formulary only if the Pharmacy and Therapeutics (P&T) 
Committee finds that the OTC drug is both cost effective and clinically 
effective. Clinical effectiveness is judged by the criteria found in 32 
CFR 199.21(e)(1)(i-ii) while cost effectiveness is determined based on 
criteria found in 32 CFR 199.21(e)(2). This cost-effectiveness standard 
is reinforced by the requirement for physician supervision through 
issuance of a prescription for the OTC drug. This requirement applies 
unless it is waived based on a recommendation of the Pharmacy and 
Therapeutics Committee for the use of the drug for certain medical 
situations, such as emergency care treatment.

[[Page 44271]]

    The selected OTC drugs would be placed in First Tier with the 
corresponding copays applicable to the point-of-service involved. 
Alternatively, based on the recommendation of the Pharmacy and 
Therapeutics Committee and approval of the Director, DHA, the retail 
copay may be waived and $0.00 copay established for the particular OTC 
drug in all points of service. No cost sharing is required at any of 
the three points of service for a uniformed service member on active 
duty.
    This final rule also makes several administrative changes to the 
TRICARE Pharmacy Benefits Program regulation to conform more closely to 
the statute (10 U.S.C. 1074g) and to clarify some procedures regarding 
the uniform formulary. One change aligns the regulation with the 
statute regarding the point of service where non-formulary drugs are 
generally available. Until very recently, the statute required 
availability in one of the three primary points of service (military 
facility, retail network, and mail order program). The current 
regulation specifies that non-formulary (Third Tier) drugs are 
generally unavailable in military facilities and generally available in 
the retail network and by mail order. The proposed rule would have 
revised this to state that non-formulary drugs would generally be 
available in the retail network or by mail order, but the Pharmacy and 
Therapeutics Committee could recommend and the DHA Director could 
approve limiting the drug to only one venue based on determinations 
that there is no significant clinical need and there is a significant 
additional government cost for access to both venues. However, since 
publication of the proposed rule, Congress has amended the statute to 
specify that non-formulary drugs will only be generally available in 
the mail order program. This removes any DoD discretion on the matter. 
Therefore, this final rule states that non-formulary drugs are 
generally available only in the mail order program. It should be noted 
that existing statutory and regulatory provisions allowing an exception 
to this in cases of medical necessity for the non-formulary drug remain 
in effect. Therefore, when medically necessary, non-formulary drugs are 
available at military treatment facility pharmacies and also from 
retail pharmacies. In the latter case, the copay will be the same as is 
applicable to formulary drugs.
    This change will reinforce DoD policy, which encourages use of more 
cost-effective drugs and points of service. A beneficiary always has 
the option of asking the health care provider to change the 
prescription to a comparable formulary drug, or, in cases of medical 
necessity, obtaining approval for dispensing the non-formulary drug at 
the formulary copayment amount. Like all other health plans with 
formularies, physicians make professional decisions regarding formulary 
alternatives, often in consultation with the pharmacist in light of the 
individual patient's circumstances. Under DoD's policy, when a 
physician provides written justification stating why the non-preferred 
drug is expected to have better clinical outcomes than the preferred 
drug, the non-formulary drug may be obtained at the formulary copay. 
This process is clearly explained to the provider by the Pharmacy 
Benefit manager through telephone or fax when the situation occurs. 
Another option for most prescriptions when the beneficiary prefers a 
non-formulary drug is to have the prescription transferred to the mail 
order program, which has a lower co-payment for a 90-day supply of a 
non-formulary drug ($46) than the retail point of service would have 
for three 30-day prescriptions for a formulary drug (3 times $20).
    Another administrative change in this final rule clarifies the 
process for formulary placement of innovator drugs newly approved by 
the Food and Drug Administration. Current practice for brand name drugs 
is that they are placed in the Second Tier the day FDA approves the 
drug. This practice has not led to the most cost-effective placement of 
these newly approved drugs and has the potential for confusion among 
patients and physicians if the drug is soon thereafter moved to Third 
Tier. DoD proposes that newly approved drugs be evaluated for their 
relative clinical benefit and relative cost, as compared to other drugs 
in the same class, at the next quarterly meeting of the Pharmacy and 
Therapeutics (P&T) Committee following FDA approval. A recommendation 
will then be made to the Director of the Defense Health Agency for tier 
placement of the drug.
    The current statute and regulation do not specifically address the 
status of the drug from the date of FDA approval to the date the P&T 
Committee's recommendation is eventually implemented. This final rule 
addresses this by considering the newly approved drug to be in a 
classification pending status and covered by TRICARE under terms 
applicable to Third Tier drugs, and by providing a period of up to 120 
days for the P&T Committee to make a final determination with respect 
to formulary classification. Tier classification will normally occur at 
the next quarterly meeting following FDA approval, but in cases when 
the FDA approval happens too close to a scheduled meeting for the 
necessary research to be done, the drug would be considered at the 
following meeting. The 120-day time period accommodates this. During 
the period prior to a decision on tier placement, the newly approved 
drug will be covered by TRICARE under Third Tier terms.
    Under the current rule, new drugs are immediately placed on the 
Second Tier (formulary brand-name drugs). Once the new drug is properly 
reviewed and compared to all other drugs in its class, it is often 
moved to the Third Tier (non-formulary), i.e., no clinical or cost 
advantage. Under this final rule, very briefly deferring tier placement 
pending a review would not require a ``tier move'' if the review finds 
no clinical or cost advantage. Movement of drugs between the tiers is 
always confusing to beneficiaries even though they are notified in 
writing of the change. The change to the rule will lessen the 
likelihood of a tier move for the new product.
    This final rule also incorporates into the regulation several 
details of current practice. While the current regulation provides that 
a uniform formulary drug that is not a generic drug may be grouped for 
copayment purposes with generic drugs if it is judged to be as cost 
effective as generic drugs in the same drug class, this final rule adds 
that a generic drug may be classified as non-formulary if it is less 
cost-effective than non-generic formulary drugs in the same drug class. 
The Uniform Formulary process requires the P&T committee to make 
recommendations to the Director, Defense Health Agency who approves or 
disapproves each recommendation after reviewing comments from the 
Beneficiary Advisory Panel on the recommendations. In the case of all 
generic drugs, the beneficiary copayment amount for any prescription 
may not exceed the total charge to TRICARE for that prescription.
    Finally, this final rule makes a ``housekeeping'' change to the 
paragraph on cost sharing amounts to make it conform to the current 
statutory specifications established by NDAA-13 and NDAA-15. In the 
current regulation, copays were calculated based on the previous 
statute that stated that the Third Tier copay could be no more than 20% 
for active duty dependents or 25% for retirees and their dependents of 
the cost of the drug. The NDAA-13 legislation provided specific set 
dollar amounts for copays from January 2014 through January 2023. NDAA-
15 adjusted several of these amounts by $3 per prescription and

[[Page 44272]]

generally eliminated availability of non-formulary drugs at the retail 
pharmacy point of service. This has rendered the text of the current 
regulation out of date and no longer accurate. The new text of the 
regulation matches the current statutory specifications. The final rule 
also reissues without change paragraphs (h)(4) and (i)(2)(ii)(D) to 
clarify agency intent and correct a technical misstatement in a 2011 
Federal Register publication.

D. Summary of and Response to Public Comments

    The proposed rule was published in the Federal Register (79 FR 
56312) September 19, 2014, for a 60-day comment period. We received 
three comments on the proposed rule from three commenters. We 
appreciate these comments, which are summarized here, along with DoD's 
response.
    Comment: One comment expressed concern regarding limiting the 
availability of non-formulary pharmaceuticals to one point of service 
based on Pharmacy and Therapeutics Committee recommendations and 
approval by the Director, Defense Health Agency. The commenter's 
concern was specific to limiting the availability of compounded 
medications to one point of service.
    Response: This final rule is not addressing compounded medications 
and the rule is doing nothing more that conforming with the current 
statutory specification (based on NDAA-15) that non-formulary drugs are 
generally only available through the mail order point of service. 
(Existing regulatory provisions at 32 CFR 199.21(h)(3)(iv) stating that 
with validated medical necessity, non-formulary drugs are provided at 
formulary drug copays remain in effect.)
    Comment: One commenter objected to the proposed rule provision that 
newly approved drugs will be maintained for a brief administrative 
review period in a ``classification pending'' status and be available 
under terms comparable to Third Tier drugs. The commenter expressed the 
view that this is contrary to the statute, which establishes the 
default position for brand name drugs at the Second Tier, and could 
impair prompt access to important new drugs.
    Response: DoD believes this change does not conflict with the 
statute, which does not address the issue of status pending the first 
opportunity of the Pharmacy and Therapeutics Committee to consider the 
appropriate tier placement of the drug. TRICARE is trying to minimize 
the beneficiary confusion associated with tier changes. This 
administrative review period is very short. It will last not more than 
120 days, and often a shorter period. And perhaps most importantly, in 
any case in which there is a validated medical necessity for the newly 
approved drug, it will be available on the same terms as apply to Tier 
Two drugs. Thus, DoD is adopting this brief administrative review 
period for initial tier placement of newly approved brand name drugs.
    Comment: One commenter expressed support for the proposed 
provisions on over-the-counter drugs, but recommended that a preamble 
summary of the provision and inclusion of an example of emergency 
contraception be written into the regulatory text.
    Response: DoD acknowledges the commenter's agreement with the 
policy, but sees no need to revise the regulatory language. It 
correctly states the intended policy, and providing an example of a 
particular drug DoD expects to be covered by that policy is more 
appropriate for a preamble summary than regulatory text.

E. Regulatory Procedures

Executive Order 12866, ``Regulatory Planning and Review'' and Executive 
Order 13563, ``Improving Regulation and Regulatory Review''

    Executive Order (EO) 12866 and 13563 require that a comprehensive 
regulatory impact analysis be performed on any economically significant 
regulatory action, defined primarily as one that would result in an 
effect of $100 million or more in any one year. The DoD has examined 
the economic, legal, and policy implications of this final rule and has 
concluded that it is not an economically significant regulatory action 
under Section 3(f)(1) of the EO. The rule has been reviewed by the 
Office of Management and Budget.

Congressional Review Act, 5 U.S.C. 801, et seq.

    Under the Congressional Review Act, a major rule may not take 
effect until at least 60 days after submission to Congress of a report 
regarding the rule. A major rule is one that would have an annual 
effect on the economy of $100 million or more or have certain other 
impacts. For this purpose we note that the budget savings identified in 
this preamble are mostly associated with ``housekeeping'' changes to 
the Code of Federal Regulations to conform to specific statutory 
requirements, with respect to which DoD has no administrative 
discretion.

Sec. 202, Public Law 104-4, ``Unfunded Mandates Reform Act''

    This rule does not contain a Federal mandate that may result in the 
expenditure by State, local and tribunal governments, in aggregate, or 
by the private sector, of $100 million or more (adjusted for inflation) 
in any one year.

Public Law 96-354, ``Regulatory Flexibility Act'' (5 U.S.C. 601)

    The Regulatory Flexibility Act (RFA) requires that each Federal 
agency prepare and make available for public comment, a regulatory 
flexibility analysis when the agency issues a regulation which would 
have a significant impact on a substantial number of small entities. 
This final rule does not have a significant impact on a substantial 
number of small entities.

Public Law 96-511, ``Paperwork Reduction Act'' (44 U.S.C. Chapter 35)

    This final rule contains no new information collection requirements 
subject to the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-
3511).

Executive Order 13132, ``Federalism''

    This final rule does not have federalism implications, as set forth 
in Executive Order 13132. This rule does not have substantial direct 
effects on the States; the relationship between the National Government 
and the States; or the distribution of power and responsibilities among 
the various levels of Government.

List of Subjects in 32 CFR Part 199

    Claims, Health care, Health insurance, Military personnel, Pharmacy 
Benefits.

    Accordingly, 32 CFR part 199 is amended as follows:

PART 199--[AMENDED]

0
1. The authority citation for part 199 continues to read as follows:

    Authority:  5 U.S.C. 301; 10 U.S.C. chapter 55.


0
2. Section 199.21 is amended by:
0
a. Adding paragraph (b)(3));
0
b. Adding paragraph (g)(5);
0
c. Revising paragraphs (h)(3)(i) and (ii);
0
d. Republishing paragraph (h)(4);
0
e. Adding paragraph (h)(5);
0
f. Revising paragraphs (i)(2)(ii) through (v), and (i)(2)(x); and
0
g. Adding paragraphs (i)(2)(xii) and (j)(4) and (5).
    The additions and revisions read as follows:


Sec.  199.21  TRICARE Pharmacy Benefits Program.

* * * * *
    (b) * * *
    (3) Over-the-counter drug. A drug that is not subject to section 
503(b)(1) of the

[[Page 44273]]

Federal Food, Drug, and Cosmetic Act (21 U.S.C. 353(b)(1)).
* * * * *
    (g) * * *
    (5) Administrative procedure for newly approved drugs. In the case 
of a newly approved innovator drug, other than a generic drug, the 
innovator drug will, not later than 120 days after the date of approval 
by the Food and Drug Administration, be added to the uniform formulary 
unless prior to that date the P&T Committee has recommended that the 
agent be listed as a non-formulary drug. If the Director, DHA 
subsequently approves that recommendation, the drug will be so listed. 
If the Director, DHA disapproves the recommendation to list the drug as 
non-formulary Third Tier, the drug will be then classified per the 
Director's decision. If, prior to the expiration of 120 days, the P&T 
Committee recommends that the agent be added to the uniform formulary 
and the recommendation is approved by the Director, DHA, that will be 
done as soon as feasible. Pending action under this paragraph (g)(5), 
the newly approved pharmaceutical agent will be considered to be in a 
classification pending status and will be available to beneficiaries 
under Third Tier terms applicable to all other non-formulary agents.
* * * * *
    (h) * * *
    (3) Availability of non-formulary pharmaceutical agents.--(i) 
General. Non-formulary pharmaceutical agents are generally not 
available in military treatment facilities or in the retail point of 
service. They are available in the mail order program.
    (ii) Availability of non-formulary pharmaceutical agents at 
military treatment facilities. Even when particular non-formulary 
agents are not generally available at military treatment facilities, 
they will be made available to eligible covered beneficiaries through 
the non-formulary special approval process as noted in this paragraph 
(h)(3)(ii) when there is a valid medical necessity for use of the non-
formulary pharmaceutical agent.
* * * * *
    (4) Availability of vaccines/immunizations. A retail network 
pharmacy may be an authorized provider under the Pharmacy Benefits 
Program when functioning within the scope of its state laws to provide 
authorized vaccines/immunizations to an eligible beneficiary. The 
Pharmacy Benefits Program will cover the vaccine and its administration 
by the retail network pharmacy, including administration by pharmacists 
who meet the applicable requirements of state law to administer the 
vaccine. A TRICARE authorized vaccine/immunization includes only 
vaccines/immunizations authorized as preventive care under the basic 
program benefits of Sec.  199.4 of this part, as well as such care 
authorized for Prime enrollees under the uniform HMO benefit of Sec.  
199.18. For Prime enrollees under the uniform HMO benefit, a referral 
is not required under paragraph (n)(2) of Sec.  199.18 for preventive 
care vaccines/immunizations received from a retail network pharmacy 
that is a TRICARE authorized provider. Any additional policies, 
instructions, procedures, and guidelines appropriate for implementation 
of this benefit may be issued by the TMA Director.
    (5) Availability of selected over-the-counter (OTC) drugs under the 
pharmacy benefits program. Although the pharmacy benefits program 
generally covers only prescription drugs, in some cases over-the-
counter drugs may be covered and may be placed on the uniform 
formulary.
    (i) An OTC drug may be included on the uniform formulary upon the 
recommendation of the Pharmacy and Therapeutics Committee and approval 
of the Director, DHA, based on a finding that it is cost-effective and 
clinically effective, as compared with other drugs in the same 
therapeutic class of pharmaceutical agents. Clinical need is judged by 
the criteria found in paragraph (e)(1)(i) and (ii) of this section. 
Cost effectiveness is determined based on criteria found in paragraph 
(e)(2) of this section.
    (ii) OTC drugs placed on the uniform formulary, in general, will be 
treated the same as generic drugs on the uniform formulary for purposes 
of availability in MTF pharmacies, retail pharmacies, and the mail 
order pharmacy program and other requirements. However, upon the 
recommendation of the Pharmacy and Therapeutics Committee and approval 
of the Director, DHA, the requirement for a prescription may be waived 
for a particular OTC drug for certain emergency care treatment 
situations. In addition, a special copayment may be established under 
paragraph (i)(2)(xii) of this section for OTC drugs specifically used 
in certain emergency care treatment situations.
    (i) * * *
    (2) * * *
    (ii) For pharmaceutical agents obtained from a retail network 
pharmacy there is a:
    (A) $20.00 co-payment per prescription required for up to a 30-day 
supply of a formulary pharmaceutical agent.
    (B) $8.00 co-payment per prescription for up to a 30-day supply of 
a generic pharmaceutical agent.
    (C) $0.00 co-payment for vaccines/immunizations authorized as 
preventive care for eligible beneficiaries.
    (iii) For formulary and generic pharmaceutical agents obtained from 
a retail non-network pharmacy there is a 20 percent or $20.00 co-
payment (whichever is greater) per prescription for up to a 30-day 
supply of the pharmaceutical agent.
    (iv) For pharmaceutical agents obtained under the TRICARE mail-
order program there is a:
    (A) $16.00 co-payment per prescription for up to a 90-day supply of 
a formulary pharmaceutical agent.
    (B) $0.00 co-payment for up to a 90-day supply of a generic 
pharmaceutical agent.
    (C) $46.00 co-payment for up to a 90-day supply of a non-formulary 
pharmaceutical agent. (D) $ 0.00 co-payment for smoking cessation 
pharmaceutical agents covered under the smoking cessation program.
* * * * *
    (x) The per prescription co-payments established in this paragraph 
(i)(2) may be adjusted periodically based on experience with the 
uniform formulary, changes in economic circumstances, and other 
appropriate factors. Any such adjustment must be approved by the 
Assistant Secretary of Defense (Health Affairs). These additional 
requirements apply:
    (A) Beginning January 1, 2016, the amounts specified in this 
paragraph (i)(2) shall be increased annually by the percentage increase 
in the cost-of-living adjustment by which retired pay is increased 
under 10 U.S. Code section 1401a for the year, rounded down to the 
nearest dollar. However, with respect to any amount of increase that is 
less than $1 or any amount lost in rounding down to the nearest dollar, 
that amount shall be carried over to, and accumulated with, the amount 
of the increase for the subsequent year or years and made when the 
aggregate amount of increases carried over for a year is $1 or more.
    (B) Effective January 1, 2023 (unless otherwise provided by law), 
the Assistant Secretary of Defense for Health Affairs may adjust the 
amounts specified in this paragraph (i)(2) as considered appropriate. 
Between January 1, 2016, and January 1, 2023, the only adjustments 
allowed are the cost of living adjustments described in paragraph 
(i)(2)(x)(A) of this section, unless otherwise provided by law.
* * * * *
    (xii) Special copayment rule for OTC drugs in the retail pharmacy 
network.

[[Page 44274]]

As a general rule, OTC drugs placed on the uniform formulary under 
paragraph (h)(5) of this section will have copayments equal to those 
for generic drugs on the uniform formulary. However, upon the 
recommendation of the Pharmacy and Therapeutics Committee and approval 
of the Director, DHA, the copayment may be established at $0.00 for any 
particular OTC drug in the retail pharmacy network.
    (j) * * *
    (4) Upon the recommendation of the Pharmacy and Therapeutics 
Committee, a generic drug may be classified as non-formulary if it is 
less cost effective than non-generic formulary drugs in the same drug 
class.
    (5) The beneficiary copayment amount for any generic drug 
prescription may not exceed the total charge for that prescription.
* * * * *

    Dated: July 21, 2015.
Patricia L. Toppings,
OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2015-18290 Filed 7-24-15; 8:45 am]
 BILLING CODE 5001-06-P