Bill seeks transparency in employees' health program

(Mark Abramson - The Washington Post)
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By Joe Davidson
Wednesday, February 24, 2010

With federal employees spending more than $10 billion a year on prescriptions, they might expect that their buying power would result in significant savings.

But apparently that is not the case -- or, if it is, no one really knows, because the system that the Federal Employees Health Benefits Program uses to buy drugs is clouded with unknowns.

Bringing more transparency to the program is a prime objective of legislation considered during a hearing Tuesday by the House Oversight and Government Reform subcommittee on the federal workforce, Postal Service and the District. It followed another hearing in June and a forum in September on what subcommittee Chairman Stephen F. Lynch (D-Mass.) called "an opaque and flawed health benefit design" that results in higher drug costs than are found in other federal programs.

"And what we have discovered is that our federal employees and retirees are not receiving the best benefit at the best price, as it relates to prescription drugs," he said.

Under Lynch's FEHBP Prescription Drug Integrity, Transparency and Cost Savings Act, the Office of Personnel Management would more closely regulate pharmacy benefit managers, which act like middlemen between insurance companies for federal workers and drug manufacturers. Pharmacy benefit managers negotiate drug prices and provide other administrative services.

Currently, "the cost structures of PBMs are utterly nontransparent," OPM Inspector General Patrick E. McFarland told the panel. "This means that there is no objective basis to determine whether the terms being offered . . . represent an advantageous arrangement."

The section in the bill on transparency, or information disclosure, says that pharmacy benefit managers must provide patients with details about the drugs bought in their name, along with the date and the price paid. This provision was included because many FEHBP prescription drug cards have been stolen and used to illegally buy drugs, sometimes narcotics, that are resold on the street.

The bill would also cap the amount that insurance companies reimburse pharmacy benefit managers for prescription drugs, prohibit a PBM from switching a patient's drug without a doctor's approval and ban the FEHBP from doing business with companies that own both retail and PBM pharmacies.

That provision would be a direct hit on CVS Caremark, a PBM company that also owns retail drugstores that are ubiquitous in the District. CVS Caremark provides prescription drug services to health insurance plans that cover most federal workers, including the Blues.

Despite their major role in the field of federal employee health benefits, the Blues and CVS Caremark were not among the witnesses at the hearing. The Pharmaceutical Care Management Association, which includes CVS Caremark, released a statement saying that the legislation "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."

Transparency might sound like something everyone would support, but the association apparently thinks there can be too much of a good thing. It said the release of "confidential pricing information . . . would undermine PBMs' ability to extract discounts from drug makers and drugstores."

Although Lynch said he's willing to make changes in the legislation, he seems dead set on significantly increasing the information available regarding PBMs. And he chided OPM for being "captive to the current system."

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