Federal employees could see cheaper prices for prescription drug coverage within the Federal Employee Health Benefits Plan, under legislation introduced recently.

The FEHBP Prescription Drug Oversight and Cost Savings Act, introduced by Rep. Stephen Lynch, D-Mass., would strengthen oversight of the program by the Office of Personnel Management, requiring greater transparency and disclosure on prescription drug purchases.

While other insurance programs are allowed to negotiate drug pricing for enrollees, the FEHBP relies on competition between its member insurance carriers, as well as prices negotiated by Pharmacy Benefit Managers.

The use of these managers and the inability to negotiate means the FEHBP pays 15 percent to 45 percent more for prescription dugs than other federal programs such as the Veterans Affairs Department and Medicare, according to Lynch.

"If we're seeking responsible alternatives to addressing deficit reduction and reining in health care costs, strong oversight of the FEHBP prescription drug benefit would be a commonsense starting point," Lynch said in a statement. "My legislation will lower federal employees' out-of-pocket spending and the program's operational costs which benefits both enrollees and taxpayers."

Under the legislation the Pharmacy Benefit Managers would be required to return 99 percent of all rebates, market share incentives and other perks received from pharmaceutical manufacturers in exchange for FEHBP business.

The legislation would also cap the prescription drug prices paid by the FEHBP at the amount of the average manufactured price, according to Lynch.

The bill already has the support of several federal employee unions.

J. David Cox, president of the American Federation of Government Employees, said the legislation protects federal employees from paying more than they should for prescription drugs.

"For the past five years federal employees have endured attacks on their pay and benefits, and on average watched their health care contributions continually increase. We thank the Congressman for introducing legislation that makes FEHBP more efficient and ensures that federal employees and taxpayers get the most return for their dollars," Cox said.

Colleen Kelley, president of the National Treasury Employees Union, said the legislation will help make the FEHBP a leader in prescription drug purchasing and disclosure.

""NTEU strongly supports Congressman Lynch's FEHBP reform bill that would result in lower prescription drug costs – it's a win-win for taxpayers and federal employees and retirees," Kelley said.

The legislation is co-sponsored by Rep. Elijah Cummings, D-Md., ranking member of the Committee on Oversight and Government Reform, and Del. Eleanor Holmes Norton, D-D.C.

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