Drug Costs a Difficult Issue

GAO noted that even without “pharmacy benefit manager” arrangements FEHB carriers likely would be able to negotiate some type of discount, making the net saving from those techniques uncertain. Prescription drug costs have been a major contributor to sharp rises in FEHB premiums in recent years-for example, those costs are blamed for adding 3.5 percentage points to premiums between 2002 and 2003 rates, roughly a third of the total average 11.1 percent average increase. That trend has produced calls from employee organizations to centralize the way FEHB procures prescription drugs in order to better harness the buying power of the more than 8 million participants. However, the pharmaceutical industry has resisted such plans, for example refusing to participate in a proposed pilot project that would have allowed one FEHB carrier to buy drugs through the discounted rate schedule for Veterans Affairs hospitals. FEHB carriers also have argued that they already are getting substantial discounts from the manufacturers and that they probably couldn’t do much better under a new system. They likely will use the latest GAO report to support that argument.