Mid-week update

One week from tomorrow, May 31, FEHB plan carriers must submit their 2013 benefit and rate proposals to OPM.

In its recent benefit and rate proposal call letter, OPM encouraged carriers to engage in efforts to control spending on specialty or biologic drugs. Last month, the Center for Studying Health System Change (CSHSC) issued a report bluntly titled "Limited Options to Manage Specialty Drug Spending." The report finds that health plan options are limited because there currently are no FDA approved bio-equivalent or bio-generic drugs and physicians, principally oncologists, often dispense the drugs, rather than PBM network or mail order pharmacies. This rubric will be tough to change, particularly while the FDA continues to twiddle its thumbs on bio-generic drugs. The European Union regulators been approving biogenerics for over five years.  Congress gave the FDA the green light to create a regulatory path for bio-equivalent approval over two years ago in the Affordable Care Act.

In Monday's post, the FEHBlog discussed a Health Care Cost Institute report finding that rising health care prices play a greater role than utilization in driving up the overall cost of health care for privately insured Americans. The CSHSC reached the same conclusion in a Health Affairs study. CSHSC believes that insurers believe that certain providers must be in their network which gives the provider a lot of leverage plus insurers don't really care because they can pass along the costs to employers. (The FEHBlog does not buy that cynicism.) The CSHSC reports that states are now considering re-entering the world of rate setting which most of them except for the FEHBlog's home state of Maryland left in the 1990s. The FEHBlog is not a rate setting proponent given the problems that Medicare's rate setting creates for the entire health care system as illustrated by the monthly S&P reports that the FEHBlog tracks.