Labor coalition raises questions about generic drug prices for some feds

Some federal employees enrolled in Blue Cross Blue Shield health insurance plans could be paying more for generic prescription drugs through a program run by CVS Pharmacy than they would if they purchased a discount program membership through the chain's retail stores, according to a report by labor union coalition Change to Win.

"The discrepancies between the prices CVS offers through its discount generics program and those it offers through the CVS Caremark-managed [federal employee program] drug plans are particularly shocking given the company's extensive promotion of generic drugs as cost-saving measures for both patients and health plans," the report said.

Change to Win supports an effort to unionize employees at CVS. The company disputes the report's conclusions.

CVS Caremark, a division of CVS, manages the prescription drug program that is part of the Blue Cross Blue Shield basic and standard options in the Federal Employees Health Benefits Program. Its role is to negotiate the prices on prescriptions for enrollees in the program. Basic option enrollees can purchase three-month supplies of generic drugs for $30 in cases when the total cost is more than that. The federal government pays the remaining cost. Employees absorb the full cost of a three-month supply for drugs that cost $30 or less. Standard option enrollees pay 20 percent of the cost of generic drugs.

But CVS also offers a Health Savings Pass program to members of the general public. For a $10 annual fee, participants -- whether insured or not -- can purchase three-month supplies of generic drugs for $9.99.

Change to Win said the price offered through the Health Savings Pass is lower than what federal employees pay at a pharmacy for 277 out of 325, or 85 percent, of the generic drugs available to basic option enrollees. When the price of those generics rises above $30 in the federal program, the federal government pays the remaining amount. The coalition said 86 percent of the drugs in the standard option formulary have prices that, though they are split between employees and the government, are higher at a pharmacy than the $9.99 price available through the CVS retail program.

Christine Cramer, the director of public relations for CVS Caremark, challenged the report's conclusions. "Change to Win has recklessly and deliberately distorted the services and savings delivered by CVS Caremark in an attempt to mislead the public and serve its own narrow agenda," she said. "Our integrated pharmacy and pharmacy benefit manager] operations provide greater choice and more convenience for customers and patients, improve health outcomes, and lower overall health care costs for plan sponsors and participants….We are proud of our strong track record of success."

Cramer said the report was simply a public relations effort by Change to Win to undermine CVS, because the company wants the issue of unionization for its employees be decided by a majority vote, rather than by employees simply signing union membership cards.

Walton Francis, author of the Consumers' CHECKBOOK 2010 Guide to Health Plans for Federal Employees, called the report "invalid and erroneous," saying its pricing calculations were based on the assumption that employees were filling their prescriptions at pharmacies, rather than through mail-order programs, which he said have lower co-payments for certain drugs.

"The great majority of those drugs are maintenance drugs that are purchased mail order … at much lower prices than the study uses," said Francis.

According to Blue Cross Blue Shield's Federal Employee Program Web site, its Mail Service Pharmacy Program is available only to standard option enrollees. For basic option enrollees, generic medications can cost employees as much as $10 for a month's supply, and three-month supplies of those drugs require three co-payments.

The Change to Win report comes at a time when FEHBP pharmaceutical benefit managers as a group are under scrutiny by Congress.

National Treasury Employees Union President Colleen Kelley said the report underscored concerns the union has expressed about FEHBP's use of pharmacy benefit managers. She said the union would work to pass legislation introduced by Rep. Stephen Lynch, D-Mass., in January that would put price caps on drugs, require management companies to return cost savings to the government, and make companies disclose pricing information.

On Wednesday Lynch is scheduled to hold a hearing on the legislation, which has divided the pharmaceutical business community. The Pharmaceutical Care Management Association, a trade group of which CVS Caremark is a member, opposes the legislation, saying it is inappropriate to try "new experiments on …one of our nation's most proven health benefit programs."

But last week, the National Community Pharmacists Association announced its support of Lynch's legislation, while objecting to the specific price capping mechanism included in the bill.

"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," the organization said in a statement.