Reporting on a development that could affect other agencies as well, the Postal Service IG has said that USPS is experiencing an alarming increase in costs related to prescription drugs provided in the FECA program, costs that are charged back to agency management.
The report focused on “compound” drugs, which are created when pharmacists or physicians mix or alter ingredients of drugs to tailor them to individuals. It said the Postal Service’s FECA-related costs related to such drugs escalated to over $98.7 million for chargeback year 2015, a $68.6 million increase over 2014. During the same period, the Postal Service’s administrative expenses for overseeing compound drugs increased by $3.6 million to $5.1 million, it said.
“These unprecedented increases were due to the higher costs of compound drugs, the rising number of compound drug prescriptions, and fraud,” it said.
It said that DoD already has restricted the use of compound drugs in its military Tricare health insurance program and that some states and private entities have done the same. However, in the FECA program, agencies must follow Labor Department policies, and while Labor “has full authority” to impose similar restrictions, it “has no incentive to do so, and DoL officials have not been receptive to adopting these or other best practices. In addition, DoL stated if a doctor approves the compound drug they assume it is necessary and will reimburse the costs.”
USPS in late 2015 requested an adjustment to its workers’ comp chargeback bill of nearly $69 million that it said was an excess that Labor had the responsibility to prevent. But Labor denied it, the report said, and the Postal Service had no choice but to pay it.
