Why It Matters

The Senate Armed Services Subcommittee on Personnel held a hearing on July 15 examining whether Express Scripts has overcharged taxpayers while driving independent pharmacies out of the TRICARE pharmacy network. Lawmakers questioned whether the pharmacy benefit manager's dual role as both administrator of the TRICARE pharmacy benefit and operator of its own mail-order pharmacies creates conflicts of interest that warrant additional oversight and contract reforms.

The Big Picture: A Two-Decade Monopoly Under Fire

Express Scripts has administered the TRICARE pharmacy benefit for more than two decades, with its current contract extending through 2029. Since 2022, approximately 13,000 pharmacies have left the TRICARE retail network, affecting an estimated 400,000 military families, according to lawmakers and witnesses. Those concerns prompted Congress to include a Government Accountability Office audit requirement for the TRICARE pharmacy program in the fiscal year 2027 National Defense Authorization Act.

At the center of the dispute is Express Scripts' role in determining reimbursement rates and network participation while also operating its own mail-order pharmacies through Express Scripts Pharmacy and Accredo Specialty Pharmacy, competing directly against the independent pharmacies it regulates. The Defense Health Agency processes over 70% of all TRICARE prescription medications through either mail order or retail networks, making this a multibillion-dollar battleground.

Lawmakers also discussed practices associated with pharmacy benefit managers, including spread pricing and patient steering. Although federal investigations have identified those practices involving pharmacy benefit managers in other government programs, senators questioned whether similar issues could exist within TRICARE and whether additional audits are necessary to determine the scope of any problems.

What They're Saying: Demands for Transparency and Accountability

Ranking Member Elizabeth Warren (D-Mass.) said she has spent years seeking additional information about the Defense Department's contract with Express Scripts and criticized the department for withholding details on the grounds that they are proprietary. Warren noted that Assistant Secretary of Defense for Health Affairs Keith Bass committed during a May hearing to conduct annual audits of the contract and provide Congress with reimbursement data comparing Express Scripts-owned pharmacies with independent pharmacies.

Subcommittee Chair Tommy Tuberville (R-Ala.) emphasized the military readiness implications, stating, "Service members cannot maintain peak readiness if they cannot reliably access the medications they need."

Dr. Micah Lansford of Roden-Smith Pharmacy testified that independent pharmacies were pushed out of the TRICARE system by contract terms, arguing that the departure of thousands of retail pharmacies primarily benefited Express Scripts' mail-order business. Greg Reybold of the American Pharmacy Cooperative also described concerns about shrinking pharmacy networks and beneficiary access.

Dr. Adam Kautzner, president of Express Scripts and Evernorth Care Management, defended the company's administration of the program. Rear Adm. (Dr.) David J. Smith, deputy director of the Defense Health Agency, testified that TRICARE provides one of the nation's most comprehensive prescription drug benefits.

Political Stakes: Pressure Mounts for Reform

Military families and advocacy organizations, including the Military Coalition, have warned that future TRICARE pharmacy contracts could reduce access overseas and create additional enrollment challenges.

For Express Scripts, the hearing intensified scrutiny over allegations that the company overcharges taxpayers while disadvantaging independent pharmacies. Lawmakers repeatedly questioned whether the company's dual role as both pharmacy benefit manager and pharmacy operator creates incentives that disadvantage competitors.

For the Defense Health Agency, the hearing focused on whether the existing pharmacy benefit manager model provides sufficient transparency and oversight. Agency officials cited billions of dollars in savings through the TRICARE Retail Refund Program, while senators questioned whether reimbursement rates and contracting practices should receive greater independent review.

Defense Health Agency officials also pointed to network performance metrics, including that more than 98% of beneficiaries live within 15 minutes of a network pharmacy and that the network exceeds contractual minimum requirements. Lawmakers questioned whether those statistics adequately reflect access challenges in rural communities and for specialty medications.

The Other Side: Defense of the Current Model

Defense Health Agency officials argued that the TRICARE retail pharmacy network exceeds contractual requirements and continues to provide broad access for beneficiaries. They maintained that the current pharmacy benefit manager model was designed by the federal government and has produced strong performance while containing costs.

What's Next: Audits and Contract Reckoning

The fiscal year 2027 NDAA requires a Government Accountability Office review of the TRICARE pharmacy program, and lawmakers indicated the audit will be a central focus of future oversight. Senators cited previous inspector general findings involving Express Scripts' administration of other federal health programs and argued that similar scrutiny is warranted for TRICARE. The Military Coalition and pharmacy organizations have also called for additional reviews of pricing practices, pharmacy network adequacy, beneficiary wait times and access standards.

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