Pharmacy prices increase

OSAN AIR BASE, Republic of Korea -- Patients experience increase in drug prices across the Military Health System
Patients who pay out-of-pocket for care received at the medical group may have experienced an increase in the amount they are normally billed for pharmaceuticals. The increase is due to a change in the pricing methodology used by the Defense Supply Center in Philadelphia. The DSCP negotiates and purchases all pharmaceuticals for the Department of Defense. Prior to the change, DSCP used "lowest cost methodology" which established a baseline to develop pharmacy rates. 

Lowest cost methodology was used because the electronic billing system was not able to accurately capture the national drug code the pharmacy dispensed. In order to avoid issues with potential fraudulent billing (i.e. a generic drug was dispensed, but a bill was sent for a brand name drug) the lowest cost methodology was adopted.
As a result, drug prices remained low across the board regardless of brand or manufacturer. 

For example, the DoD would purchase ibuprofen from one of hundreds of vendors. Due to the mass quantity purchased, the vendor would sell the pills at $.001 each or less than a penny for each pill. That (lowest) price would then be applied to all ibuprofen prices regardless of which vendor the drug was purchased from or what price was actually paid. 

This year, DSCP adopted a "median price" methodology which means the middle price, not average, at which the drugs were purchased, was added to the pharmacy rate file to determine the price patients would be charged for drugs dispensed from the military treatment facilities. Although some drug prices were not affected, there was approximately a 146 percent rate increase across the 113,000 drugs in the pharmacy rate file. The reason for the increase was to correct the prices to allow the DoD to recover what it costs to purchase to the drugs. 

Team Osan members with questions about the change in price methodology can contact Capt. Lauren Chavez at 784-1510 or lauren.chavez@osan.af.mil