NCPA Testifies in Support of Bill to Improve Federal Employees' Drug Benefit

Alexandria, Va. - February 23, 2010

Richard Beck, RPh, Executive Director of the Texas Pharmacy Business Council, testified today on behalf of the National Community Pharmacists Association (NCPA) at a hearing of the House Subcommittee on the Federal Workforce, Postal Service and the District of Columbia on H.R. 4489, the Federal Employees Health Benefits Program (FEHBP) Prescription Drug Integrity, Transparency, and Costs Savings Act. The bill's original sponsor, Subcommittee Chair Rep. Stephen Lynch (D-MA), invited Beck, who has lobbied extensively for greater transparency of the administrators of prescription drug plans—pharmacy benefit managers (PBMs)—to discuss why H.R. 4489 is needed and assess its potential impact. 

Beck's testimony expanded on NCPA's Jan. 29th letter to Rep. Lynch, which praised the bill's intent, while providing recommendations that could strengthen its effectiveness. 

He provided historical context by saying, "NCPA has long championed the need for both federal and state oversight of pharmacy benefit managers (PBMs) due to the problems our members and their patients continue to face in dealing with these unregulated entities. PBMs have been permitted to operate virtually unchecked since their inception—slowed only by the increasing amount of litigation alleging fraudulent and deceptive business practices filed against the PBMs each year." 

Then Beck detailed the basic framework of H.R. 4489, declaring it "would provide the Office of Personnel Management (OPM) greater insight into the inner workings of the various PBMs that currently manage the prescription drug benefits for the 270 different FEHBP health plans. Armed with this vital information, the federal government would be able to make more informed decisions about the services—and the true costs of such services—that are being provided by the PBMs to the FEHBP, and in turn, federal employees." 

Next, Beck recounted efforts in Texas to rein in PBMs and described two state-commissioned studies. The first one, requested by Lieutenant Governor David Dewhurst, detailed "many of the questionable drug pricing practices used by the PBMs and recommended that the state take steps to ensure that they were getting 'the most bang for their buck' with regard to their pharmacy benefit management services." 

The second report, by the Texas State Auditor's office, determined "that the state agencies needed to ensure that their PBM contracts did not unduly restrict their rights to audit the PBM and that the contracts needed to clearly specify costs, discounts and other fees associated with the services provided by the PBM to ensure that the agencies clearly understood the true costs and discounts associated with their plans." 

As a result of the reports, Texas' legislature has enacted legislation that "allows Texas state agencies to share the terms and conditions of their PBM contract with other state agencies as well as grants the agencies full audit rights." Because CVS Caremark is the dominant PBM for state employees in Texas, an effort is underway to have follow-on legislation to ensure they are in line with what might pass regarding federal employees, since they are the dominant PBM for federal employees. 

The Texas State Employees Retirement System (ERS), which initially opposed the 2007 PBM legislation according to Beck, has now incorporated the elements of that legislation (including the 100% pass through of rebates) in its PBM contract with CVS Caremark and projects a $260 million savings over four years. 

Beck concluded by describing areas for concern in H.R. 4489, by saying, "The current language establishes that the amount that the carrier plan may pay a PBM for a prescription drug may not exceed the drug's average manufacturer price (AMP)...If AMP were to be used it would need to be significantly redefined and increased in such a way that truly reflects the retail pharmacy acquisition cost of a prescription drug, as well as updated to be a more real-time benchmark. Also, we suggest that the committee consider including some provisions to protect pharmacies from the egregious and aggressive auditing practice of PBMs." 

A complete copy of Beck's congressional testimony can be found here

The National Community Pharmacists Association (NCPA®) represents America's community pharmacists, including the owners of more than 22,700 independent community pharmacies, pharmacy franchises, and chains. Together they represent an $88 billion health-care marketplace, employ over 65,000 pharmacists, and dispense over 40% of all retail prescriptions. To learn more go to www.ncpanet.org or read NCPA's blog, The Dose, at http://ncpanet.wordpress.com.

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