[Federal Register Volume 75, Number 26 (Tuesday, February 9, 2010)]
[Proposed Rules]
[Pages 6335-6336]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-2666]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Office of the Secretary
[DoD-2008-HA-0029; 0720-AB22]
32 CFR Part 199
Civilian Health and Medical Program of the Uniformed Services
(CHAMPUS)/TRICARE: Inclusion of TRICARE Retail Pharmacy Program in
Federal Procurement of Pharmaceuticals
AGENCY: Office of the Secretary, Department of Defense.
ACTION: Reconsideration and request for comments.
-----------------------------------------------------------------------
SUMMARY: This is notification of an additional opportunity to comment
on the final rule of March 17, 2009, implementing provisions of section
703 of the National Defense Authorization Act (NDAA) for Fiscal Year
2008). This statute extended pharmaceutical Federal Ceiling Prices
(FCPs) to TRICARE Retail Pharmacy Program prescriptions. The Department
of Defense (DoD) issued a final rule on March 17, 2009, implementing
the law. On November 30, 2009, the U.S. District Court for the District
of Columbia ``ordered that the final rule is remanded without vacatur
for the Defense Department to consider in its discretion whether to
readopt the current iteration of the rule or adopt another approach to
implement 10 U.S.C. 1074g(f).'' As part of DoD's reconsideration, DoD
solicits public comments on the implementation of the statute, DoD's
resulting regulations, and the matters addressed for DoD's
consideration in the Court's Memorandum Opinion.
DATES: Written comments received at the address indicated below by
March 11, 2010 will be considered and addressed in the final rule.
ADDRESSES: You may submit comments, identified by docket number and/or
Regulatory Information Number (RIN) number and title, by any of the
following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Mail: Federal Docket Management System Office, 1160
Defense Pentagon, Washington, DC 20301-1160.
Instructions: All submissions received must include the agency name
and docket number or RIN for this FR document. The general policy for
comments and other submissions from members of the public is to make
these submissions available for public viewing on the Internet at
http://www.regulations.gov as they are received without change,
including any personal identifiers or contact information.
FOR FURTHER INFORMATION CONTACT: Rear Admiral Thomas McGinnis, Chief,
Pharmacy Operations Directorate, TRICARE Management Activity, telephone
(703) 681-2890.
SUPPLEMENTARY INFORMATION:
A. Background
Section 703 of NDAA-08 enacted 10 U.S.C. 1074g(f). It provides that
with respect to any prescription filled on or after the date of
enactment (January 28, 2008), the TRICARE Retail Pharmacy Program shall
be treated as an element of DoD for purposes of the procurement of
drugs by Federal agencies under 38 U.S.C. 8126 to the extent necessary
to ensure pharmaceuticals paid for by DoD that are provided by network
retail pharmacies to TRICARE beneficiaries are subject to FCPs. This
section 8126 established FCPs for covered drugs (requiring a minimum 24
percent discount) procured by DoD and three other agencies from
manufacturers. The NDAA required implementing regulations.
DoD issued a proposed rule July 25, 2008 (73 FR 43394-97). It
featured voluntary agreements with manufacturers, tied to preferred
Uniform Formulary status, to pay DoD refunds for drugs entered into the
normal commercial chain of transactions that end up as prescriptions
given to TRICARE beneficiaries and paid for by DoD, the refund amount
being the portion of the price of the drug sold by the manufacturer
that exceeds the FCPs. The proposed rule also
[[Page 6336]]
solicited comment regarding any other appropriate and legally
permissible implementation approach.
DoD issued a final rule March 17, 2009 (74 FR 11279-93), which was
similar to the proposed rule. The preamble to the final rule discussed
DoD's effort, particularly in the use of voluntary agreements tied to
formulary status, to find ``common ground'' with the drug industry,
which opposes FCPs. The preamble also stated that DoD interpreted the
statute as automatically capping the price manufacturers may charge for
those drugs that enter into the commercial chain of transactions that
end up as TRICARE-paid prescriptions, resulting in the conclusion that
the amount above the FCP was an overpayment by DoD, which in turn
required a refund of the overpayment. After the final rule became
effective, May 26, 2009, drug companies signed voluntary agreements
covering approximately 99 percent of TRICARE retail prescriptions.
However, at the same time, there was a litigation challenge to the
validity of the final rule in a case called Coalition for Common Sense
in Government Procurement v. U.S., U.S. District Court for the District
of Columbia, Civ. No. 08-996 (JDB), 2009 U.S. Dist. LEXIS 110746. The
Court issued a decision November 30, 2009. This decision had four major
points:
Although 10 U.S.C. 1074g(f) requires that FCPs shall
apply, the statute does not specify how they will apply. DoD
incorrectly interpreted the statute as requiring manufacturer refunds,
to the exclusion of other possible approaches. DoD must reconsider the
implementation of the statute as a function of its discretionary
judgment, rather than only as a legal interpretation. For example, DoD
should exercise its discretion to consider ``which of the five parties
that participate in the retail pharmacy program--manufacturers,
wholesalers, network pharmacies, private pharmacy benefit managers, and
TRICARE beneficiaries--must bear any costs associated with imposing the
Federal Ceiling Prices.''
While DoD considers whether to readopt the final rule as
it currently stands or to change it, the final rule will remain in
effect, as will the manufacturer agreements that cover approximately 99
percent of TRICARE retail prescriptions. (This is the effect of the
Court's Order that the final rule is ``remanded without vacatur.'')
DoD correctly interpreted the statute as applying FCPs to
all prescriptions filled on or after January 28, 2008.
The Court ordered that DoD file a status report with the
Court by not later than March 1, 2010, ``documenting its consideration
on remand.''
B. Invitation of Additional Public Comments
Although the Court did not specifically require more public
comments, DoD invites public comments on the final rule issued March
17, 2009, as well as additional comments regarding any other
appropriate and legally permissible implementation approach. DoD
recommends that interested parties focus their comments on those
matters that the Court addressed as requiring DoD reconsideration on
the remand of the final rule. In considering alternative approaches,
DoD intends to use at least the following three criteria (and welcomes
comment on other suggested criteria): (1) Harmony with the statute and
legislative history; (2) consistency with best business practice; and
(3) practicability of administration. In addition to the citations
noted above, to assist interested parties, the final rule and the
Court's Order and Memorandum Opinion are posted on the TRICARE Pharmacy
Program Web site at: http://www.tricare.mil/pharm_mfg/default.cfm.
Dated: February 3, 2010.
Patricia L. Toppings,
OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2010-2666 Filed 2-8-10; 8:45 am]
BILLING CODE 5001-06-P