FEHBP's H.R. 4489 overhaul will undermine cost-saving tools and disrupt prescription drug benefits

Pharmaceutical Care Management Association (PCMA)Feb 25 2010

Pharmaceutical Care Management Association (PCMA) President and CEO Mark Merritt released the following statement on today’s Federal Workforce, Postal Service, and District of Columbia Subcommittee on House Oversight and Government Reform Committee hearing on the Federal Employees Health Benefits Program (FEHBP):

“Regrettably, the FEHBP Prescription Drug Integrity, Transparency, and Cost Savings Act (H.R. 4489) would undermine many of the cost-saving tools used in FEHBP and disrupt prescription drug benefits for 8 million federal employees, retirees, and their families.”

“The FEHBP has long been touted as a gold standard for employee benefits and is often cited as the model for health insurance reform efforts at the state and national levels. A recent survey by the Office of Personnel Management (OPM) – the agency administering FEHBP – found that federal employees are overwhelmingly satisfied with their current health benefits by a 7-1 margin. This is significant, as pharmacy benefits are the most often-used part of the program.

“Regrettably, the FEHBP Prescription Drug Integrity, Transparency, and Cost Savings Act (H.R. 4489) would undermine many of the cost-saving tools used in FEHBP and disrupt prescription drug benefits for 8 million federal employees, retirees, and their families.

“Currently, FEHBP relies on the same sophisticated pharmacy benefit managers (PBMs) used by Fortune 500 employers, Medicare Part D, and other successful programs to improve affordability. PBMs employ an array of tools to combat rising drug costs, including promoting a greater reliance on generic drugs, expanded use of home delivery, and more competition generated through formularies. These proven tools have helped drastically slow growth in drug expenditures.

“Specific provisions in the bill that would undermine cost-saving tools and reduce choices for enrollees would:

• Force FEHBP to stop managing drug benefits like Fortune 500 companies and unions and instead operate more like the Medicaid program for the poor, which is bankrupting state governments across the country.
• Pay pharmacies at a loss based on the government pricing formula currently used by Medicaid, which would cause many pharmacies to reconsider participating in the program.
• Undermine OPM, which already has the authority to impose all of the bill’s provisions without seeking any new authority from Congress.
• Interfere with existing state laws by preventing pharmacies from automatically substituting lower cost generic drugs. The bill would also restrict drug substitution based on safety if the replacement drug was ‘higher in cost.’
• Decrease competition and access by effectively banning some PBMs from participating in FEHBP. For example, PBMs that are partially owned by chain drugstores would be banned from the program, while PBMs owned by health plans would be forbidden from even making an operating margin.
• Require plans to send FEHBP enrollees — for each and every prescription — confidential pricing information that would undermine PBMs’ ability to extract discounts from drug makers and drugstores.”