((a)) ** .—**

((1)) The Secretary of Defense, after consulting with the other administering Secretaries, shall establish an effective, efficient, integrated pharmacy benefits program under this chapter (hereinafter in this section referred to as the “pharmacy benefits program”).

((2))

((A)) The pharmacy benefits program shall include a uniform formulary of pharmaceutical agents, which shall assure the availability of pharmaceutical agents in the complete range of therapeutic classes. The selection for inclusion on the uniform formulary of particular pharmaceutical agents in each therapeutic class shall be based on the relative clinical and cost effectiveness of the agents in such class. With respect to members of the uniformed services, such uniform formulary shall include pharmaceutical agents on the joint uniform formulary established under section 715 of the National Defense Authorization Act for Fiscal Year 2016.

((B)) In considering the relative clinical effectiveness of agents under subparagraph (A), the Secretary shall presume inclusion in a therapeutic class of a pharmaceutical agent, unless the Pharmacy and Therapeutics Committee established under subsection (b) finds that a pharmaceutical agent does not have a significant, clinically meaningful therapeutic advantage in terms of safety, effectiveness, or clinical outcome over the other drugs included on the uniform formulary.

((C)) In considering the relative cost effectiveness of agents under subparagraph (A), the Secretary shall rely on the evaluation by the Pharmacy and Therapeutics Committee of the costs of agents in a therapeutic class in relation to the safety, effectiveness, and clinical outcomes of such agents.

((D)) The Secretary shall establish procedures for the selection of particular pharmaceutical agents for the uniform formulary. Such procedures shall be established so as best to accomplish, in the judgment of the Secretary, the objectives set forth in paragraph (1). Except as provided in subparagraph (F), no pharmaceutical agent may be excluded from the uniform formulary except upon the recommendation of the Pharmacy and Therapeutics Committee.

((E)) Pharmaceutical agents included on the uniform formulary shall be available to eligible covered beneficiaries through—

((i)) facilities of the uniformed services, consistent with the scope of health care services offered in such facilities and additional determinations by the Pharmacy and Therapeutics Committee of the relative clinical and cost effectiveness of the agents;

((ii)) retail pharmacies designated or eligible under the TRICARE program or the Civilian Health and Medical Program of the Uniformed Services to provide pharmaceutical agents to covered beneficiaries; or

((iii)) the national mail-order pharmacy program.

((F))

((i)) The Secretary may implement procedures to place selected over-the-counter drugs on the uniform formulary and to make such drugs available to eligible covered beneficiaries. An over-the-counter drug may be included on the uniform formulary only if the Pharmacy and Therapeutics Committee established under subsection (b) finds that the over-the-counter drug is cost effective and clinically effective. If the Pharmacy and Therapeutics Committee recommends an over-the-counter drug for inclusion on the uniform formulary, the drug shall be considered to be in the same therapeutic class of pharmaceutical agents, as determined by the Committee, as similar prescription drugs.

((ii)) Regulations prescribed by the Secretary to carry out clause (i) shall include the following with respect to over-the-counter drugs included on the uniform formulary:

((I)) A determination of the means and conditions under paragraphs (5) and (6) through which over-the-counter drugs will be available to eligible covered beneficiaries and the amount of cost sharing that such beneficiaries will be required to pay for over-the-counter drugs, if any, except that no such cost sharing may be required for a member of a uniformed service on active duty.

((II)) Any terms and conditions for the dispensing of over-the-counter drugs to eligible covered beneficiaries.

((3)) The pharmacy benefits program shall assure the availability of clinically appropriate pharmaceutical agents to members of the armed forces, including, where appropriate, agents not included on the uniform formulary described in paragraph (2).

((4)) The pharmacy benefits program may provide that prior authorization be required for certain pharmaceutical agents to assure that the use of such agents is clinically appropriate.

((5)) The pharmacy benefits program shall assure the availability to eligible covered beneficiaries of pharmaceutical agents not included on the uniform formulary. Such pharmaceutical agents shall be available through the national mail-order pharmacy program under terms and conditions that shall include cost-sharing by the eligible covered beneficiary as specified in paragraph (6).

((6))

((A)) In the case of any of the years 2018 through 2027, the cost-sharing amounts under this subsection for eligible covered beneficiaries shall be determined in accordance with the following table:

((B)) For any year after 2027, the cost-sharing amounts under this subsection for eligible covered beneficiaries shall be equal to the cost-sharing amounts for the previous year adjusted by an amount, if any, determined by the Secretary to reflect changes in the costs of pharmaceutical agents and prescription dispensing, rounded to the nearest dollar.

((C)) Notwithstanding subparagraphs (A) and (B), the cost-sharing amounts under this subsection for a dependent of a member of the uniformed services who dies while on active duty, a member retired under chapter 61 of this title, or a dependent of a member retired under such chapter shall be equal to the cost-sharing amounts, if any, for 2017.

((D)) Notwithstanding subparagraphs (A), (B), and (C), the Secretary may selectively waive or reduce cost-sharing amounts under this subsection for a dependent of a member of the uniformed services described in if the dependent is enrolled in the TRICARE Prime Remote program and accompanies the member to the duty assignment of the member at the expense of the Federal Government.

((E)) Notwithstanding subparagraphs (A), (B), and (C), the cost-sharing amount under this subsection for any prescription contraceptive on the uniform formulary provided through a retail pharmacy described in paragraph (2)(E)(ii) or through the national mail-order pharmacy program is $0.

((7)) The Secretary shall establish procedures for eligible covered beneficiaries to receive pharmaceutical agents that are not included on the uniform formulary but that are considered to be clinically necessary. Such procedures shall include peer review procedures under which the Secretary may determine that there is a clinical justification for the use of a pharmaceutical agent that is not on the uniform formulary, in which case the pharmaceutical agent shall be provided under the same terms and conditions as an agent on the uniform formulary. Such procedures shall also include an expeditious appeals process for an eligible covered beneficiary, or a network or uniformed provider on behalf of the beneficiary, to establish clinical justification for the use of a pharmaceutical agent that is not on the uniform formulary.

((8)) In carrying out this subsection, the Secretary shall ensure that an eligible covered beneficiary may continue to receive coverage for any maintenance pharmaceutical that is not on the uniform formulary and that was prescribed for the beneficiary before , and stabilized the medical condition of the beneficiary.

((9))

((A)) Beginning on , the pharmacy benefits program shall require eligible covered beneficiaries generally to refill non-generic prescription maintenance medications through military treatment facility pharmacies or the national mail-order pharmacy program.

((B)) The Secretary shall determine the maintenance medications subject to the requirement under subparagraph (A). The Secretary shall ensure that—

((i)) such medications are generally available to eligible covered beneficiaries through retail pharmacies only for an initial filling of a 30-day or less supply; and

((ii)) any refills of such medications are obtained through a military treatment facility pharmacy or the national mail-order pharmacy program.

((C)) The Secretary may exempt the following prescription maintenance medications from the requirement of subparagraph (A):

((i)) Medications that are for acute care needs.

((ii)) Such other medications as the Secretary determines appropriate.

((10)) Notwithstanding paragraphs (2), (5), and (6), in order to encourage the use by covered beneficiaries of pharmaceutical agents that provide the best clinical effectiveness to covered beneficiaries and the Department of Defense (as determined by the Secretary, including considerations of better care, healthier people, and smarter spending), the Secretary may, upon the recommendation of the Pharmacy and Therapeutics Committee established under subsection (b) and review by the Uniform Formulary Beneficiary Advisory Panel established under subsection (c)—

((A)) exclude from the pharmacy benefits program any pharmaceutical agent that the Secretary determines provides very little or no clinical effectiveness to covered beneficiaries and the Department under the program; and

((B)) give preferential status to any non-generic pharmaceutical agent on the uniform formulary by treating it, for purposes of cost-sharing under paragraph (6), as a generic product under the TRICARE retail pharmacy program and mail order pharmacy program.

((b)) ** .—**

((1)) The Secretary of Defense shall, in consultation with the Secretaries of the military departments, establish a Pharmacy and Therapeutics Committee for the purpose of developing the uniform formulary of pharmaceutical agents required by subsection (a), reviewing such formulary on a periodic basis, and making additional recommendations regarding the formulary as the committee determines necessary and appropriate. The committee shall include representatives of pharmacies of the uniformed services facilities and representatives of providers in facilities of the uniformed services. Committee members shall have expertise in treating the medical needs of the populations served through such entities and in the range of pharmaceutical and biological medicines available for treating such populations. The committee shall function under procedures established by the Secretary under the regulations prescribed under subsection (j).

((2)) The committee shall meet at least quarterly and shall, during meetings, consider for inclusion on the uniform formulary under the standards established in subsection (a) any drugs newly approved by the Food and Drug Administration.

((c)) ** .—**

((1)) Concurrent with the establishment of the Pharmacy and Therapeutics Committee under subsection (b), the Secretary shall establish a Uniform Formulary Beneficiary Advisory Panel to review and comment on the development of the uniform formulary. The Secretary shall consider the comments of the panel before implementing the uniform formulary or implementing changes to the uniform formulary.

((2)) The Secretary shall determine the size and membership of the panel established under paragraph (1), which shall include members that represent—

((A)) nongovernmental organizations and associations that represent the views and interests of a large number of eligible covered beneficiaries;

((B)) contractors responsible for the TRICARE retail pharmacy program;

((C)) contractors responsible for the national mail-order pharmacy program; and

((D)) TRICARE network providers.

((d)) ** .—**

((1)) In the operation of the pharmacy benefits program under subsection (a), the Secretary of Defense shall assure through management and new contractual arrangements that financial resources are aligned such that the cost of prescriptions is borne by the organization that is financially responsible for the health care of the eligible covered beneficiary.

((2)) The Secretary shall use a modification to the bid price adjustment methodology in the managed care support contracts current as of , to ensure equitable and timely reimbursement to the TRICARE managed care support contractors for pharmaceutical products delivered in the nonmilitary environments. The methodology shall take into account the “at-risk” nature of the contracts as well as managed care support contractor pharmacy costs attributable to changes to pharmacy service or formulary management at military medical treatment facilities, and other military activities and policies that affect costs of pharmacy benefits provided through the Civilian Health and Medical Program of the Uniformed Services. The methodology shall also account for military treatment facility costs attributable to the delivery of pharmaceutical products in the military facility environment which were prescribed by a network provider.

((3)) With respect to the TRICARE retail pharmacy program described in subsection (a)(2)(E)(ii), the Secretary shall ensure that a contract entered into with a TRICARE pharmacy program contractor includes requirements described in section 1860D–12(b)(6) of the Social Security Act () to ensure the provision of information regarding the pricing standard for prescription drugs.

((e)) ** .—** The Secretary of Defense shall implement the use of the Pharmacy Data Transaction Service in all fixed facilities of the uniformed services under the jurisdiction of the Secretary, in the TRICARE retail pharmacy program, and in the national mail-order pharmacy program.

((f)) ** .—** With respect to any prescription filled after , the TRICARE retail pharmacy program shall be treated as an element of the Department of Defense for purposes of the procurement of drugs by Federal agencies under to the extent necessary to ensure that pharmaceuticals paid for by the Department of Defense that are provided by pharmacies under the program to eligible covered beneficiaries under this section are subject to the pricing standards in such section 8126.

((g)) ** .—**

((1)) The Secretary of Defense shall establish and maintain a program (to be known as the “Military Health System Prescription Drug Monitoring Program”) in accordance with this subsection. The program shall include a special emphasis on drugs provided through facilities of the uniformed services.

((2)) The program shall be—

((A)) comparable to prescription drug monitoring programs operated by States, including such programs approved by the Secretary of Health and Human Services under section 399O of the Public Health Service Act (); and

((B)) applicable to designated controlled substance prescriptions under the pharmacy benefits program.

((3))

((A)) The Secretary shall establish appropriate procedures for the bi-directional sharing of patient-specific information regarding prescriptions for designated controlled substances between the program and State prescription drug monitoring programs.

((B)) The purpose of sharing of information under this paragraph shall be to prevent misuse and diversion of opioid medications and other designated controlled substances.

((C)) Any disclosure of patient-specific information by the Secretary under this paragraph is an authorized disclosure for purposes of the health information privacy regulations promulgated under the Health Insurance Portability and Accountability Act of 1996 ().

((4))

((A)) Any procedures developed pursuant to paragraph (3)(A) shall include appropriate safeguards, as determined by the Secretary, concerning cyber security of Department of Defense systems and operational security of Department personnel.

((B)) To the extent the Secretary considers appropriate, the program may be treated as comparable to a State program for purposes of bi-directional sharing of controlled substance prescription information.

((5)) For purposes of this subsection, any reference to a program operated by a State includes any program operated by a county, municipality, or other subdivision within that State.

((h)) ** .—** The Secretary of Defense shall ensure that drugs made available through the facilities of the armed forces under the jurisdiction of the Secretary include labels and other labeling that are in compliance with the requirements of the Federal Food, Drug, and Cosmetic Act ( et seq.).

((i)) ** .—** In this section:

((1)) The term “eligible covered beneficiary” means a covered beneficiary for whom eligibility to receive pharmacy benefits through the means described in subsection (a)(2)(E) is established under this chapter or another provision of law.

((2)) The term “pharmaceutical agent” means drugs, biological products, and medical devices under the regulatory authority of the Food and Drug Administration.

((3)) The term “over-the-counter drug” means a drug that is not subject to section 503(b) of the Federal Food, Drug, and Cosmetic Act ().

((4)) The term “prescription drug” means a drug that is subject to section 503(b) of the Federal Food, Drug, and Cosmetic Act ().

((j)) ** .—** The Secretary of Defense shall, after consultation with the other administering Secretaries, prescribe regulations to carry out this section.