Analysis: White House prescription drug proposal could mean fewer options

Tuesday - 10/25/2011, 5:14pm EDT

Robert Moffit, senior fellow, Heritage Foundation's Center for Policy Innovation

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The deficit reduction supercommittee is considering a White House proposal to allow the Office of Personnel Management to negotiate directly with drug manufacturers.

Currently, OPM contracts with pharmacy benefits managers who negotiate drug prices. The administration said the change proposed in its letter to the supercommittee would offer lower prescription drug prices to federal employees and save the government $1.6 billion over the next decade.

But, in an interview with In Depth with Francis Rose, Robert Moffit, senior fellow at the Heritage Foundation's Center for Policy Innovation, said the White House's projected savings are a "very, very strange number."

In its proposal to the supercommittee, the White House said FEHBP pays $40 billion per year for health coverage and drugs represent 30 percent. Over the next decade, drugs would cost $120 billion, so the $1.6 billion savings is a mere 2 percent of drug expenditures, Moffit pointed out.

Lower costs for feds will also mean less options, he said.

"What you've got to worry about is OPM cracking down on the drugs that are available to you in order to get savings," Moffit said.

He said his concern is the OPM's negotiations would then become a larger issue of "congressional micro-management."

For now, the details of how the administration's proposal would work are not clear. The letter to the supercommittee only contains one paragraph on the proposal.

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