6/26/09: NTEU has expressed concern about the rising costs in FEHBP, especially the high costs of prescription drugs which could contribute to higher premiums for federal employees and retirees. For some time, NTEU has questioned whether OPM has leveraged its large pool of participants in FEHBP to get the best possible prices for enrollees. FEHBP is the largest employer sponsored health insurance program in the country serving approximately 7.7 million people. Yet costs continue to go up. Last November, NTEU recommended a study on whether OPM can get a better deal for consumers by directly negotiating for prescription drugs like the VA does, rather than going through individual insurance carriers, which is now the case.

On June 24, 2009, the House Subcommittee on the Federal Workforce called in agency personnel and health care pharmaceutical analysts to take a look at this issue. While a lot of work needs to be done on the overall issue, and the subcommittee plans further hearings, some of NTEU’s points were made. There appears to be evidence that OPM is paying more for prescription drugs than is warranted. The agency’s Inspector General testified that the use of pharmacy benefits managers (PBMs) and their lack of price transparency has been a problem. The IG testimony states: “this lack of transparency invites bad pricing and contracting practice...” Chairman Lynch indicated that plans under FEHBP appear to pay more for prescription drugs than other federal entities such as the VA, Defense Department, Medicare, Medicaid and the Public Health Service.

Click here to review the Inspector General’s testimony which lays out some of the complexities of this issue, and confirms that NTEU’s suspicions about drug pricing are definitely worth investigating. NTEU will stay close to this issue and do what we can to change the law, if necessary, to allow OPM to get a better deal for consumers.