ATR and COGC Oppose H.R. 1971

Today Americans for Tax Reform and its Cost of Government Center sent the following letter to Congresswoman Cathy McMorris Rodgers (WA-5) warning her that the Cost of Government Center is opposed to H.R. 1971, the Pharmacy Competition and Consumer Choice Act of 2011.  This legislation takes the wrong approach to pharmaceutical industry oversight reform while preventing pharmaceutical benefit managers from investigating and stopping prescription drug fraud as well as Medicare fraud, waste and abuse.

Dear Congresswoman McMorris Rodgers,

We write to express concerns with H.R. 1971, the Pharmacy Competition and Consumer
Choice Act of 2011. The bill takes the wrong approach to reforming oversight practices in
the pharmaceutical industry. Rather than ameliorate concerns regarding waste, fraud and
abuse, the bill will exacerbate them, potentially at a high cost to taxpayers. The bill adds
regulatory burdens to Pharmacy Benefit Managers while holding other players in the
industry harmless, incentivizing abuse and increasing costs in the already-broke Medicare

The bill would prevent PBMs from defending against pharmacies that overfill
prescriptions, whether the error is made intentionally or not. Under H.R. 1971, a pharmacy
can fill an order for 2,000 prescriptions rather than 20 and will still be guaranteed payment
for 2,000 orders. This presents a huge concern for taxpayers who may be on the hook for
fraudulent orders processed through Medicare.

Also, holding PBMs responsible for these expenses endangers the cost-savings patients
enjoy vis-à-vis PBM counsel of health care plans. Under current law, PBMs have recourse
against fraudulent prescription filings and are able to pursue action if a pharmacy violates
its contract. The bill strips PBMs of their ability to address and correct prescription drug
fraud and could force PBMs to contract with pharmacies that operate outside the terms of
their agreement.

While the current audit process between PBMs and pharmacies may be imperfect, H.R.
1971 slants the deck against one player—PBMs—while rewarding other actors in the
prescription drug industry. By proscribing PBM action against unfair or unsafe pharmacy
actions, this bill could prevent PBMs from effectively addressing patient safety; even
though they have been integral players in providing important informational services such
as advising on harmful medical interactions and increasing patient compliance.

H.R. 1971 adds a regulatory layer and administrative burden to the PBM-pharmacy
relationship that makes it harder to correct errors and respond to fraud. PBMs already
follow federal and state regulations for oversight. Injecting more government control and
regulation decreases competition in the pharmaceutical industry while driving up
prescription drug costs for consumers. Real reform should look to prevent fraud, but
H.R. 1971 incentivizes it.

View the letter HERE.

TAGS: Regulation, Business, Health Care

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