NCPA Backs Bill to Improve Federal Employees' Drug Benefit; Offers Changes to Legislation

Alexandria, Va. - January 29, 2010

In a letter to Rep. Stephen Lynch (D-MA), the National Community Pharmacists Association's (NCPA) Bruce T. Roberts, RPh, executive vice president and CEO, offered support and recommendations for improving the recently introduced bill, H.R. 4489, The FEHBP Prescription Drug Integrity, Transparency and Cost Savings Act. Lynch's bill expands the Office of Personnel Management's (OPM) oversight capabilities for the Federal Employees Health Benefits Program (FEHBP), which includes prescription drug services. Rep. Lynch also chairs the subcommittee with jurisdiction over FEHBP, and in the last year has held hearings on the effectiveness the program. 

In the letter, Roberts commends Lynch for including the following four provisions designed to create greater transparency that could lead to savings in the program:

  1. Giving OPM access to data from drug manufacturers and pharmacy benefit managers (PBMs) on deals to promote the usage of certain drugs over others, and forcing the PBMs to "pass through 99% of rebates earned on behalf of plan sponsors" as opposed to keeping those resources to themselves. 

  2. Exposing mechanisms that reveal PBMs' manipulation of the pricing structure "by using different reimbursement bases for prescriptions dispensed by mail order pharmacies compared to retail pharmacies," which benefits PBMs since they own mail order pharmacies. 

  3. Assuring that patients "receive the prescription drug actually prescribed by their physician," which would end the PBM drug switching unless "approved by the provider and results in actual savings to the plan". 

  4. Prohibiting PBM ownership of retail pharmacies to "eliminate the conflicts of interest that are inherent when a manufacturer exerts a controlling interest in a PBM or when a retail pharmacy owns a controlling interest in a PBM".
If these provisions were enacted they would represent a breakthrough at the federal level by mitigating some of the more egregious PBM business practices and help create momentum for more sweeping reform. However, H.R. 4899 has other provisions that should be amended to prevent unintended, but possibly deleterious, consequences to pharmacies and their patients. Roberts explains in the letter: 

"There are several areas of the bill which we would encourage be modified. 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). The use of AMP as a pricing benchmark for the carrier, and in turn the pharmacy provider, is problematic unless AMP were to be significantly redefined or increased in such a way that truly reflects the retail pharmacy acquisition cost of a prescription drug, which is higher than a drug's current AMP. Moreover, use of AMP would be inappropriate to pay for generic drugs because of the need for reimbursement policies to encourage the use of generics. 

"In addition, the definition of AMP in the legislation is not appropriate because it includes mail order sales. It should only reflect sales to retail pharmacies. Without modification of these provisions, community pharmacy participation in the program would be threatened, reducing patients' access to prescription medications." 

A complete copy of the letter 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 or read NCPA's blog, The Dose, at
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