Bill would prohibit federal PBM contracts with companies operating PBMs, retail pharmacies

WASHINGTON A bill to reform pharmacy benefit managers made headway in the House Wednesday as a subcommittee vote sent it to the Committee on Oversight and Government Reform.

The Federal Workforce, Postal Service and District of Columbia Subcommittee voted Wednesday to send H.R. 4489, the FEHBP Prescription Drug Integrity, Transparency and Cost Savings Act, to the full committee. The bill was introduced in January by Reps. Stephen Lynch, D-Mass., Gerry Connolly, D-Va., and Elijah Cummings, D-Md.

Current law prohibits companies that own a PBM and manufacture drugs from doing business with FEHBP health plans, but the bill would extend that restriction to companies that operate PBMs and own retail pharmacies; one such company is CVS Caremark, one of the largest PBM contractors for the FEHBP. CVS Caremark has a contract with the FEHBP that will last until the end of 2011.

“The legislation proposed by Congressman Lynch would not benefit plan participants, the plans themselves or taxpayers, but would instead reduce the number of competitors for the program and thus increase costs for beneficiaries and taxpayers,” CVS Caremark spokeswoman Christine Cramer told Drug Store News. “In addition, while the bill calls for oversight and transparency provisions, the Office of Personnel Management already has rigorous oversight and transparency requirements and regularly audits PBMs providing services to FEHBP plans.”

The Pharmaceutical Care Management Association, an industry trade group for the PBM industry, also expressed opposition to the bill.

“Seventy-four percent of those enrolled in FEHBP oppose a new effort by Congress to reduce pharmacy choices, arbitrarily set prices and limit the number of pharmacy organizations which can participate in the program,” PCMA president and CEO Mark Merritt said in a statement. “FEHBP enrollees feel that [the Office of Personnel Management] does a great job managing the program and think Congress is more likely to hurt than help the program by forcing OPM to change FEHBP’s pharmacy benefits.”

The bill would also prohibit unauthorized prescription switching by PBMs, require them to return 99% of all drug rebates to the FEHBP and require them to give the Office of Personnel Management full access to certain data and broad auditing rights.