How One Lawmaker Wants to Make Feds’ Prescription Drugs Cheaper

FEHBP participants pay up to 45 percent more for meds than those in other federally run programs.

Stronger oversight of negotiators for federal employees and retirees’ prescription drug benefits would end feds’ overpayment for their medicine, according to a Democratic lawmaker.

Rep. Stephen Lynch, D-Mass., has introduced the Federal Employees Health Benefits Program Prescription Drug Oversight and Cost Savings Act, which would bring FEHBP enrollees’ drug costs in line with those of other federal health care users, according to supporters of the legislation. The Office of Personnel Management has called the reform unnecessary, saying it already mandates transparency in the negotiations of its prescription benefits.

Currently, health care carriers participating in FEHBP contract with pharmacy benefit managers (PBMs), which negotiate with drug manufacturers and pharmacies on behalf of enrollees. Opponents to the current system have criticized PBMs as middlemen that do little to return savings to FEHBP participants.

Lynch’s bill would prohibit PBMs from switching drugs without a physician’s approval; demand PBMs return to the federal plan 99 percent of all rebates, market share incentives and other monies from pharmaceutical companies in exchange for FEHBP business; and create stronger disclosure requirements.

In previous budget blueprints, President Obama has proposed streamlining the pharmaceutical negotiating process in FEHBP. Obama has called for OPM to contract with one PBM, which would negotiate with drug manufacturers for all FEHBP enrollees. The White House estimated the change would save $1.6 billion over 10 years. Conservative groups blasted that proposal, saying the centralized government structure would have “guarantee[d] the politization” of prescription drug coverage for federal workers and retirees while giving them fewer choices.

OPM has also criticized the need for reform, speaking out against Lynch’s proposals in previous iterations. John O’Brien, OPM’s director for health care and insurance, has repeatedly said the agency has required more transparency between FEHBP carriers and their contracted PBMs. OPM has told carriers to focus on reducing prescription drug costs in its recent annual call letters, including provisions for more reporting on their PBMs.

While OPM has remarked directly on the bill in the past, the agency declined to do so on Monday, saying it does not comment on pending legislation.

The National Treasury Employees Union praised the measure, noting FEHBP enrollees currently pay 15 percent to 45 percent more than Medicare participants, or those in systems run by the departments of Veterans Affairs or Defense.

“Lynch’s bill is a step in the right direction to enacting better controls over drug spending in FEHBP, and to reducing costs for federal employees and retirees,”  NTEU National President Colleen Kelley said.

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