Bill would boost oversight of FEHBP prescription drugs

Legislation aims to keep costs to federal employees in check.

Following up on a promise that he made during the summer, Rep. Stephen Lynch, D-Mass., introduced legislation on Thursday that would expand the Office of Personnel Management's power to regulate pharmaceutical benefits for enrollees in the Federal Employees Health Benefits Program.

H.R. 4489 would increase oversight of pharmaceutical benefit managers, the third-party negotiators whom critics claim are a large factor in higher prescription drug prices.

"In the midst of rising health care costs and a national debate on how to best reduce health care costs, it's important that we ensure that the FEHBP is providing our federal employees with the best value for their prescriptions," said Lynch, chairman of the House Oversight and Government Reform Subcommittee on the Federal Workforce, Postal Service and the District of Columbia.

The legislation enacts strict new regulations for PBMs, including capping prescription drug prices to the Average Manufacturer Price; prohibiting pharmaceutical benefit managers from switching drugs without a physician's approval; and requiring PBMs to return to the federal plan almost all proceeds from rebates and incentives from drug manufacturers. The bill also would create stronger disclosure requirements for PBMs and prohibit a pharmaceutical company from owning a controlling interest in a PBM.

The bill does stop short of declaring PBMs federal subcontractors, a proposal that Lynch supported during a June hearing. H.R. 4489 also doesn't include other proposals under consideration, such as implementing statutory pricing for prescription drugs, or carving out a single prescription drug plan for all FEHBP enrollees.

The legislation received immediate praise from federal employee groups.

"This bill is a solid first step," said National Treasury Employees Union President Colleen Kelley in a statement. "Getting a better handle on the underlying costs associated with purchasing drugs and making pricing more transparent will lead to a better use of taxpayers' money."

But the Pharmaceutical Care Management Association, an industry group representing PBMs, issued a statement claiming the measure could drive up costs for consumers.

"Congress has enough on its plate without also trying new experiments on the successful Federal Employees Health Benefits Program, one of our nation's most proven health benefit programs," the organization stated. "The legislation would force mandated disclosure of sensitive pricing information, giving the upper-hand to drug makers and drug stores to charge higher prices at the expense of federal employees."

PCMA also argued that by mandating price limits, the legislation would severely restrict drug choices for FEHBP enrollees.