Pressured by the White House and drug industry lobbyists, Congress has killed a Senate-passed provision that would have forced pharmaceutical manufacturers to grant the Department of Defense deep discounts on drugs dispensed through the TRICARE retail pharmacy network.

House Republicans were under enormous pressure last month to sideline a provision inserted in the 2007 defense authorization bill that would cut 40 percent or more off the cost of many drugs available to TRICARE beneficiaries through retail network pharmacies and stores.

Defense officials contend that the Veterans Health Care Act of 1992 requires drug makers to include TRICARE retail drugs in Federal Supply Schedule, or FSS, discount agreements negotiated with the Department of Veterans Affairs. The discounts already apply to drugs dispensed through base pharmacies, the TRICARE mail order program and VA pharmacies.

To avoid having to grant more discounts, drug manufacturers have filed a lawsuit challenging the Pentagon's contention. The Senate Armed Services Committee voted to make that lawsuit moot with clarifying language in its defense bill that federal discounts are to apply to TRICARE retail drugs, too.

After the Senate passed its bill, White House politicos began to pressure House Republicans to fight the Senate provision in final negotiations over the defense bill, in effect, undercutting their own Defense Department as it strives to curb soaring drug costs.

Rep. Chet Edwards (D-Texas) introduced a "motion to instruct" House conferees to accept the Senate's drug discount provision when negotiating behind closed doors. Edwards, joined by several Democratic colleagues, argued that applying FSS discounts for TRICARE retail drugs would save $251 million in 2007 alone.

Opposing Edwards' motion was Rep. Steve Buyer (R-Ind.), chairman of House Veterans Affairs Committee and a friend to drug manufacturers. Eli Lilly & Co. has its headquarters within miles of Buyer's district. The company this year is his second largest campaign contributor, providing $10,000.

Buyer's re-election campaign, as of Sept. 11, had received more than $45,000 from drug manufacturers through political action committee contributions. Only 13 House members, all of them Republicans, had received more in pharmaceutical dollars, according to data gathered by the Center for Responsive Politics.

Drug manufacturers worry that expanding FSS discounts to all TRICARE drug sources will lead to them having to negotiate discounts with other federal programs.

A few weeks later a compromise defense bill emerged with the Senate's drug discount provision removed.

But in a surprise move, conferees also shelved a House plan to raise TRICARE co-payments on generic and military formulary drugs obtained through retail outlets. Congress wants no change in TRICARE fees or co-pays for at least a year.

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