Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)/TRICARE: TRICARE Pharmacy Benefits Program, 56312-56316 [2014-22276]

Agencies

• DEPARTMENT OF DEFENSE
• Office of the Secretary

[Federal Register Volume 79, Number 182 (Friday, September 19, 2014)]
[Proposed Rules]
[Pages 56312-56316]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-22276]


=======================================================================
-----------------------------------------------------------------------

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: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This proposed rule would implement new authority authorizing 
an over-the-counter (OTC) drug program, make several administrative 
changes to the TRICARE Pharmacy Benefits Program regulation in order to 
conform it more closely to the statute, and clarify some procedures 
regarding the operation of the uniform formulary. Specifically, the 
proposed rule would: provide implementing regulations for the OTC drug 
program that has recently been given permanent statutory authority; 
conform the pharmacy program regulation to the statute regarding point-
of-service availability of non-formulary drugs and copayments for all 
categories of drugs; clarify the process for formulary placement of 
newly approved drugs; and clarify several other uniform formulary 
practices.

DATES: Written comments received at the address indicated below by 
November 18, 2014 will be considered and addressed in the final rule.

ADDRESSES: You may submit comments, identified by docket number and/or 
RIN number and title, by any of the following methods:
    Federal eRulemaking Portal: https://www.regulations.gov. Follow the 
instructions for submitting comments.
    Mail: Federal Docket Management System Office, 4800 Mark Center 
Drive, East Tower, Suite 02G09, Alexandria, VA 22350-3100.
    Instructions: All submissions received must include the agency name 
and docket number or Regulatory Information Number (RIN) for this 
Federal Register 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 https://www.regulations.gov as they are received without change, including any 
personal identifiers or contact information.

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 the Proposed Rule

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

2. Summary of the Major Provisions of the Proposed Rule

    a. It would establish 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 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 would conform the regulation to the statute regarding the 
number of points of service where non-formulary drugs are required to 
be available. They would be generally available in the retail program 
and the mail order program unless the Pharmacy and Therapeutics 
Committee recommends limiting the drug to a single point of service--
retail or mail order--based on determinations that there is no 
significant clinical need and there is a significant additional 
government cost for access in both, and the recommendation is approved 
by the Director, Defense Health Agency (DHA).
    c. It would clarify 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 in 
retail and mail order under terms comparable to non-formulary drugs.
    d. As a ``housekeeping'' change, it would conform the rule to the 
new statutory specifications for copayment amounts under section 712 of 
NDAA-13.

3. Costs and Benefits

    The benefits of the proposed rule are that it will more closely 
conform the regulation to the statute and facilitate more effective 
administration of the TRICARE Pharmacy Benefits Program. The proposed 
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.

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

[[Page 56313]]

specifications, such as: That formulary drugs are generally available 
in all three points of service; and that non-formulary drugs are 
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.
    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 proposed 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. 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. Provisions of the Proposed Rule

    The proposed rule would establish the process for selecting OTC 
products for coverage under the TRICARE pharmacy benefit 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 is cost-
effectiveness and patient access. DoD will consider and approve an OTC 
drug for inclusion under this proposal 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 C.F.R. 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.
    The selected OTC drugs would be placed in First Tier with the 
corresponding copays applicable to the point-of-service involved (i.e., 
$0.00 in military facilities and mail order, $5.00 in the retail 
network). Alternatively, based on the recommendation of the Pharmacy 
and Therapeutics Committee and approval of the Director, DHA, the 
retail copay may be waived and a $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.
    Another purpose of this proposed rule is to make 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 
is to align the regulation with the statute regarding the number of 
points of service where non-formulary drugs are required to be 
available. The statute requires 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, by contrast, states that non-formulary drugs are 
generally required to be available in the retail program and the mail 
order program. This requirement applies unless the Pharmacy and 
Therapeutics Committee recommends 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 at all 
venues, and the recommendation is approved by the Director, Defense 
Health Agency (DHA).
    In this context, clinical need means there are reasons in the 
course of clinical care that the non-formulary drug is required over 
other, preferred, formulary drugs. A finding of clinical need also 
means that limiting access to one point of service would affect the 
ability to deliver prompt, appropriate medical care, for example timing 
of therapy or use of the drug for acute care indications, among other 
concerns. This change would 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

[[Page 56314]]

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 lower co-payments for non-formulary drugs than 
the retail point of service.
    Another administrative change would clarify 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 TRICARE Management Activity 
for tier placement of the drug.
    The current regulation does 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. The proposed rule would 
address 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 the proposed 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 proposed change to the rule will 
lessen the likelihood of a tier move for the new product.
    The proposed rule would also incorporate 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, the 
proposed rule would add 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, the proposed rule would make a ``housekeeping'' change to 
the paragraph on cost sharing amounts to make it conform to the current 
statutory specifications established by NDAA-13. 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. This has rendered 
the text of the current regulation out of date and no longer accurate. 
The new proposed text of the regulation matches the current statutory 
specifications. The proposed 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. 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 proposed rule and 
has concluded that it is not an economically significant regulatory 
action under Section 3(f)(1) of the EO. The rule is a significant 
regulatory action and it has been reviewed by the Office of Management 
and Budget.

Congressional Review Act, 5 U.S.C. Sec.  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. This proposed rule is a not a major rule under the 
Congressional Review Act.

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

[[Page 56315]]

Executive Order 13132, ``Federalism''

    This proposed 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.

Public Comments Invited

    This is a proposed rule. DoD invites public comments on all of its 
provisions.

List of Subjects in 32 CFR Part 199

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

    Accordingly, 32 CFR part 199 is proposed to be 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 new paragraphs (b)(3) and (g)(5), (h)(5), (i)(2)(xii) and 
(j)(4) and (5),
0
b. Revising paragraphs (h)(3)(i) and (ii), (i)(2)(ii) through (v), and 
(i)(2)(x), and
0
c. Republishing paragraph (h)(4) without change.
    The additions and revisions read as follows:


Sec.  199.21.  Pharmacy Benefits Program.

* * * * *
    (b)* * *
    (3) Over-the-counter drug. A drug that is not subject to section 
503(b)(1) of the 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 (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. They are generally 
available in the retail program and the mail order program unless the 
Pharmacy and Therapeutics Committee recommends limiting a particular 
non-formulary drug to only one of these points of service based on 
determinations that there is no significant clinical need and there is 
a significant additional government cost for access in both, and the 
recommendation is approved by the Director, DHA. Clinical need is 
judged by the criteria found in paragraph (e)(1)(i-ii) of this section. 
Cost effectiveness is determined based on criteria found in paragraph 
(e)(2) of this section.
    (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 paragraph 
(h)(3)(ii) of this section 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-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) * * *
    (i) * * *
    (ii) For pharmaceutical agents obtained from a retail network 
pharmacy there is a:
    (A) $17.00 co-payment per prescription required for up to a 30-day 
supply of a formulary pharmaceutical agent.
    (B) $5.00 co-payment per prescription for up to a 30-day supply of 
a generic pharmaceutical agent.
    (C) $44.00 co-payment per prescription for up to a 30-day supply of 
a non-formulary pharmaceutical agent.
    (D) $0.00 co-payment for vaccines/immunizations authorized as 
preventive care for eligible beneficiaries.

[[Page 56316]]

    (iii) For formulary and generic pharmaceutical agents obtained from 
a retail non-network pharmacy there is a 20 percent or $17.00 co-
payment (whichever is greater) per prescription for up to a 30-day 
supply of the pharmaceutical agent.
    (iv) For non-formulary pharmaceutical agents obtained at a retail 
non-network pharmacy there is a 20 percent or $44.00 co-payment 
(whichever is greater) per prescription for up to a 30-day supply of 
the pharmaceutical agent.
    (v) For pharmaceutical agents obtained under the TRICARE mail-order 
program there is a:
    (A) $13.00 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) $43.00 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) of this section 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, 2014, the amounts specified in this 
paragraph (i)(2) of this section 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) of this section as 
considered appropriate. Between January 1, 2014, 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. 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: September 15, 2014.
Aaron Siegel,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2014-22276 Filed 9-18-14; 8:45 am]
BILLING CODE 5001-06-P