How A Pharma Giant Is Looting The Pentagon

The drug intermediary overseeing the military’s TRICARE pharmacy program is limiting access to care and overcharging taxpayers hundreds of dollars on average per prescription.

The Lever

Reporter: Helen Santoro

One of the nation’s most powerful pharmacy intermediaries is quietly charging the military’s health insurance program $484 more on average per generic drug than independent and big chain pharmacies, according to exclusive data shared with The Lever. The scheme forces taxpayers to spend significantly more to inflate the company’s profits, while cutting off many military families from local, accessible pharmacy care.

Lawmakers are working to add language to the pending defense spending bill that could shed light on this overbilling by requiring the U.S. Department of Defense to finally disclose how much it’s paying pharmacies for medicines. But standing in the way is the formidable lobbying arm of the pharmacy giant’s corporate owner, which has spent millions on military health insurance and other issues over the past six years. 

Express Scripts — a pharmacy benefit manager owned by health insurance giant Cigna — has overseen pharmacy benefits for the military’s health insurance program, TRICARE, since 2003. The program serves more than 9 million active-duty service members, retirees, and their families. 

This government-granted monopoly has allowed the company to “steer patients to its own pharmacy while disadvantaging competitors” and charge significantly more for commonly used generic drugs, according to a 2024 letter by lawmakers to the Department of Defense. 

It’s difficult to know how much excess profit Express Scripts has netted from the arrangement. Despite years of bipartisan complaints and requests for more information by independent pharmacists, there’s been no effort to collect comprehensive data on the total amount Express Scripts is charging TRICARE for the drugs it provides up to this point. 

“This is happening with a government-funded contract where things are supposed to be transparent,” said Monique Whitney, executive director of Pharmacists United for Truth and Transparency, an advocacy group that supports independent pharmacies. “Why are we seeing these prices?” 

A spokesperson from Express Scripts said that this pricing analysis, which used drug costs listed on TRICARE’s online patient platform, is “inaccurate.” 

“We have been made aware that it is displaying an inaccurate number for ‘what my plan pays’ for certain medicines dispensed to TRICARE beneficiaries,” an Express Scripts spokesperson wrote in an email to The Lever. “We are making updates to the tool.”

The company did not respond to follow-up questions requesting details about this inaccuracy. 

Whitney questions Express Scripts’ claim. “Why would you put such widely inaccurate numbers up?” she said. “These are all questions that, if I were the Department of Defense, are the first things I would be looking at, because all evidence shows [Express Scripts] has been ripping the department off for forever.” 

Years Of Contracts

Pharmacy benefit managers act as middlemen between drug manufacturers and health insurers, determining which drugs the insurer will cover and how much they will cost. All of the top pharmacy benefit managers — Express Scripts, CVS Caremark, and OptumRx — are owned by major health care companies, giving these corporations control over almost every stage of the drug-pricing process. 

In 2003, the Department of Defense awarded Express Scripts its first contract to manage the TRICARE pharmacy home delivery program. According to a February report by the U.S. Government Accountability Office, a congressional watchdog, the move was made “with the goal of improving service for beneficiaries and saving money for military families and taxpayers by creating a more efficient, competitively priced pharmacy network.” 

Nearly five years later, Express Scripts won another contract to manage all TRICARE prescription services, including specialty medications for complex medical conditions. Then, in 2021, they received a multiyear, $4.3 billion contract with the Department of Defense. 

A year later, in October 2022, the company cut 15,000 pharmacies from the TRICARE network, many of which were small, independent drugstores. The move may have forced 380,000 beneficiaries to find a new drugstore or switch to a mail-order pharmacy owned by Express Scripts, such as Accredo, according to a Government Accountability Office report.

The development triggered outcry among dozens of members of Congress from both parties. “What reasons has Express Scripts given [the Defense Health Agency] for terminating the 2022 [pharmacy] contracts early?” the lawmakers asked in a letter to the then-acting assistant secretary for health affairs at the Defense Department. “This will only further reduce the pharmacy network for TRICARE patients and their families, and may force beneficiaries to change pharmacies at a time when many receive annual vaccinations.” CONTINUE READING