PBM issue raises its head

Joe Davidson reports in the Washington Post today that House Federal Workforce Subcommittee Chairman Stephen Lynch (D Mass) plans to introduce legislation to create greater transparency over prescription benefit manager ("PBM") operations. PBMs, like Medco, Caremark, and Express Scripts, manage prescription drug benefits for health plans. "The legislation would strengthen the ability of the Office of Personnel Management, which administers the plan, to obtain information about the finances of making drugs available to federal employees." I find this puzzling because the general healthcare reform legislation that Congress is considering likely will include new PBM transparency standards. Furthermore, the rising drug costs in the FEHBP principally are attributable, in my view, to the Program's demographics (the Program is 50% annuitants) and the increasing effectiveness of drug therapy. Clamping down on drug costs will require much tighter control over prescription drug benefits, such as closed formularies like those found in Veterans Administration facilities. That's a tough sell in an employee benefit program.