Most Think Bill Would Hurt, Not Help 

(Washington, DC)— Seventy-four percent of those enrolled in the Federal Health Benefits Program (FEHBP) oppose a new effort by Congress to change the program’s prescription drug benefits, according to a new poll released by the Pharmaceutical Care Management Association (PCMA).  

The survey of 305 civilian federal employees in the Washington, DC metro area was conducted in response to the FEHBP Prescription Drug Integrity, Transparency, and Cost Savings Act (H.R. 4489) sponsored by Representatives Stephen Lynch (D-MA), Gerald Connolly (D-VA), Elijah Cummings (D-MD), and Lloyd Doggett (D-TX).  The bill would give Congress the power to set prices, limit the pharmacy organizations that can participate, and force the Office of Personnel Management (OPM), which administers FEHBP, to make other changes as well.

Currently, FEHBP uses the same approach to pharmacy benefits as Fortune 500 companies, Medicare Part D and other benefits programs which rely upon consumer choice and competition rather than price controls to hold down costs and maintain flexible benefits.  Eighty-three percent of FEHBP’s enrollees are satisfied with their prescription drug coverage, according to the survey.

“These new data clearly show that politicians supporting legislation to change FEHBP’s pharmacy benefit could be walking into a political minefield.  By lopsided margins, federal workers like their prescription drug benefits, like the way OPM administers FEHBP, and think Congress could make things worse, not better, by trying to micromanage it,” said PCMA President and CEO Mark Merritt. 

Key findings from the Ayres, McHenry & Associates survey include:

• Civilian federal employees in the DC metro area are overwhelmingly satisfied with the Federal Employees Health Benefits Program, and with their prescription drug coverage.  These federal employees say they are satisfied with the prescription drug program by an 83 to 14 percent margin.
• These employees overwhelmingly prefer a benefits system that has no price controls but greater choice to a system that offers fewer choices but has the government set prices.  Civilian federal employees in the DC area prefer the “current FEHBP system which offers more choices but the government does not set prices” to a “system like some other government programs, which offer fewer choices but has the government set prices” by a 74 to 22 percent margin.
• DC area civilian federal employees think the Office of Personnel Management does a good job of making sure the FEHBP offers health benefits that are as good as those offered in the private sector, and think Congress should leave the OPM in charge of their benefits.  These employees think the OPM does a good job in this regard by a 78 to 13 percent margin.  Employees think Congress should leave the OPM in charge of any changes to the FEHBP, rather than Congress being in charge of those changes, by a 74 to 25 percent margin.
• These employees think Congress should allow federal employees to choose the plan that works best for them regardless of whether the plans are owned by pharmacy chains or health plans.  When asked whether “Congress should pass a law prohibiting prescription drug plans from participating in federal employees programs if they are owned by pharmacy chains or health plans” or “Congress should allow federal employees to choose the plan that works best for them, regardless of whether they are owned by pharmacy chains or health plans,” federal employees prefer maintaining the choice for themselves by an 86 to 12 percent margin.
• A majority of federal employees agree that Congress will hurt the quality of their benefits if it takes more of a role in regulating their benefits, and think Congress should make any changes to Congress’ own plan before applying changes for all federal employees.  These civilian federal employees think Congress will hurt rather than help their benefits if it becomes more involved in regulating their benefits by a 60 to 24 percent margin, and agree that Congress should make changes to its own plan first by a 90 to 8 percent margin.

(Washington, DC)— The Pharmaceutical Care Management Association (PCMA) released the following statement today on a new Government Accountability Office (GAO) report examining specialty-tier prescription drugs in Medicare Part D:

“The high prices of biotech drugs in the new GAO report underscore the importance of creating much-needed competition to lower costs and increase access for these life-saving products.  Many of the high-cost biotech medicines examined by GAO do not face generic competition, straining public and private payers’ ability to provide affordable drug benefits for these necessary and often life-changing products.  Generic competition lowers costs because it gives patients the power to choose and gives manufacturers an incentive to reduce prices. 

“Meaningful biogenerics legislation should be the first stop for policymakers tasked with financing health reform. PCMA and a broad coalition of consumers, employers, labor unions, and others support bipartisan legislation that would create a regulatory pathway for the Food and Drug Administration to approve generic versions of biologic products.”

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(Washington, DC)— 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):

“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.” 

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Click here for PCMA’s Statement for the Record on HR 4489, The ‘FEHBP Prescription Drug Integrity, Transparency, and Cost Savings Act.’

Legislative Hearing of the Subcommittee on Federal Workforce, Postal Service, and the District of Columbia

February 23, 2010

Additionally, PCMA is pleased to announce an exciting session with three of the industry’s leading managed markets executives:

• Jim Robinson, Vice President Health Systems, Astellas Pharma, US
• Alex Azar, Vice President of Business-to-Business and Puerto Rica, Lilly USA, LLC
• Robert DeLuca, Vice President U.S. Managed Markets, Payor Marketing and Managed Markets Operations, sanofi-aventis.

Please visit the events section of the PCMA web site to view the most recent agenda and to register for the PBM Summit.

“Congress has enough on its plate without also trying new experiments on the successful Federal Employees Health Benefits Program (FEHBP), one of our nation’s most proven health benefit programs.  FEHBP is one of the best-functioning, well-regarded health programs in America and should not be subject to wholesale political changes.

“Health care changes must improve quality, lower costs, and enhance choice and competition.  This new legislation runs counter to these goals by radically changing the way federal employees’ prescription drug benefits are administered and would make the FEHBP operate more like those provided through other federal agencies that significantly limit prescription drug choices.

“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.  Numerous economists and budget experts — including the Federal Trade Commission — have explored this issue and found that the wrong kind of transparency increases, rather than decreases, costs.

 “The federal government uses pharmacy benefit managers (PBMs) to ensure that its employees have the most affordable, safe, flexible, and generous prescription drug benefits possible.  PBMs lower drug benefit costs by encouraging the use of generic drug alternatives, negotiating discounts from manufacturers and drug stores, saving money with home delivery, and using health information technology like e-prescribing to reduce waste and improve patient safety. 

“The utilization of these tools is important as the FEHBP is designed to keep the federal government competitive in attracting and retaining personnel who might otherwise choose to work in the private sector.  This private sector approach is much different from the ones used by other government programs such as the Veterans Administration (VA).  To save money, those programs simply use artificial price controls, severely restrict drug choices and, in the case of the VA, include only a handful of the nation’s 60,000 pharmacies in their networks.  The draconian steps included in this legislation would significantly undermine the goals of the Office of Personnel Management (OPM).   

 “OPM can and does periodically audit, review, and change the way it manages FEHBP drug benefits.   Policymakers should be wary of this legislation and any potential changes that would disrupt benefits for millions of federal workers, especially when considering that a recent OPM survey found that the overwhelming majority of federal employees are satisfied with their health benefits by an almost 7-to-1 margin.”

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“While everyone knew that mail- service pharmacy made prescriptions more affordable, this new empirical evidence shows that it can also improve outcomes for patients with chronic conditions.  This should be an ‘eye-opener’ for any policymaker who wants to address the chronic care crisis in America,” said PCMA President and CEO Mark Merritt. 

Key findings from UCLA and Kaiser Permanente’s Division of Research include:

• 84.7 percent of patients who received their medications by mail at least two-thirds of the time stuck to their physician-prescribed regimen, versus 76.9 percent who picked up their medications at “brick and mortar” Kaiser Permanente pharmacies.
• Mail-order pharmacy users were more likely than local pharmacy users to have a financial incentive to fill their prescriptions by mail (49.6 percent vs. 23.0 percent), and to live a greater distance away from a local pharmacy (8.0 miles vs. 6.7 miles).

Other government and independent research has examined the increased savings and safety provided by mail-service pharmacies. That research includes:

• Federal Trade Commission (FTC).  The FTC found that mail-order pharmacies provide more savings than retail pharmacies and dispense lower-cost generic drugs at roughly the same rate as retail pharmacies. The report also found that “prescription drug plan sponsors generally paid lower prices for drugs purchased through PBM-owned mail-order pharmacies than for drugs purchased through mail-order or retail pharmacies not owned by PBMs.”
• Harvard University. Independent, peer-reviewed research conducted by Harvard University and published in 2004 by Health Affairs, analyzed some 670 million prescription drug claims and concluded that generic drug substitution rates at PBM mail-service pharmacies were slightly higher than at retail pharmacies.
• Pharmacotherapy: Official Journal of the American College of Clinical Pharmacy. Peer reviewed data found that highly automated mail-service pharmacy dispensed prescriptions with 23-times greater accuracy than retail pharmacies.  The mail-service error rate was zero in several of the most critical areas, including dispensing the correct drug, dosage, and dosage form.

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PCMA: Accelerate Competition to Lower Costs, Increase Access

(Washington, DC)— A new report from the Government Accountability Office (GAO) that finds “extraordinary price increases” for brand-name drug products from 2000 – 2008 was largely fueled by the “lack of therapeutically equivalent drugs” and “limited competition,” underscores the need for policymakers to promote policies in health reform which increase competition and lower costs, the Pharmaceutical Care Management Association (PCMA) said today.

“History shows that companies – including drug companies – raise prices when they don’t face competition and lower prices when they do.   That’s why consumers have saved literally hundreds of billions of dollars since the Hatch-Waxman law first allowed generic drugs to compete with their brand-name counterparts 26 years ago,” said PCMA President and CEO Mark Merritt. “Now it’s time to take the next step and allow affordable generics to compete with expensive biotech medicines.  It’s also time to scrap ‘protected drug class’ laws which protect ‘me-too’ drug makers from having to compete with one another in Medicare.  These reforms alone would save billions and address the root cause of higher drug costs.”

Key findings from the GAO report include:

• The number of extraordinary price increases each year more than doubled from 2000 to 2008 and most of the extraordinary price increases ranged between 100 percent and 499 percent.
• Almost 90 percent of all brand-name drug products that had an extraordinary price increase sustained the new higher price – by either having another increase in price or remaining at the increased price. 

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Even More Can Be Done, However, to Lower Prescription Drug Costs

(Washington, DC)— Expenditures on prescription drugs increased just 3.2 percent in 2008 – the smallest annual rate of increase in 47 years – according to new data released today by the Centers for Medicare and Medicaid Services (CMS).  This historic low in drug spending growth coincides with the expanding use of cost-saving tools developed by pharmacy benefit managers (PBMs) in private and public programs, the Pharmaceutical Care Management Association (PCMA) said today.

“PBMs have pioneered tools – including incentivizing the use of generic medications, e-prescribing, and mail-service pharmacies – that improve savings, access, and safety for consumers and payers.  Since the key to access is affordability, payers and policymakers alike should explore broader use of PBMs’ cost-saving tools and reject approaches that make prescription drugs more expensive,” said PCMA President and CEO Mark Merritt.

The new prescription drug data are highlighted in an article in Health Affairs, “Health Care Spending at a Historic Low in 2008,” and available in depth from CMS. Key data points include:

• Prescription drug expenditures increased 3.2 percent in 2008, the slowest annual rate of increase in 47 years.
• Overall health care spending increased 4.4 percent in 2008, a higher rate of increase than prescription drugs.
• Consumer out-of-pocket expenditures accounted for 21 percent of prescription spending in 2008, down from 31 percent in 1998 and 60 percent in 1988.

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PCMA represents the nation’s pharmacy benefit managers (PBMs), which improve affordability and quality of care through the use of electronic prescribing (e-prescribing), generic alternatives, mail-service pharmacies, and other innovative tools for 210-plus million Americans.