Prescription Drugs Crowd Out Shipbuilding in US Defense Budget

• Bloomberg has seen the US Navy’s latest 30-year shipbuilding plan, which finally acknowledges that it “requires funding at an unsustainable level” to deliver the number of new vessels in the plan. The Congressional Budget Office (CBO) has been saying so for years.

• When the Government Accountability Office pointed out last month that the Pentagon was paying prescription drugs at a higher prices than Medicaid, the Pentagon had no comment to offer. With drugs now accounting for more than $5B/year in the Pentagon budget (i.e. separately from Veterans Affairs), you would think that would elicit some response. It seems clear that paying near-retail rates for most drugs for military personnel is not optimal when you’ve become one of the biggest drugs buyers in the country.

• TRICARE reform is one of the big potential money savers within military pay and benefits, as outlined in a recent presentation [PDF] from CBO analyst Carla Tighe Murray. She projected [PDF] last year that military healthcare could grow from less than 10% of DoD’s budget to more than 14% by 2030. A more recent, formal CBO report shows a gentler scope, but the trend still points upward. That’s only 16 years away, which in shipbuilding time is not that much. Who would have thought General Dynamics would end up competing with Pfizer?