Tuesday, March 5, 2013

Fwd: qotd: Medicare Part D drug program wide open to conflicts of interest

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Medicare Part D drug program wide open to conflicts of
Date: Tue, 5 Mar 2013 08:13:05 -0800
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>

Department of Health and Human Services
Office of Inspector General
March 2013
Gaps in Oversight of Conflicts of Interest in Medicare Prescription Drug


1. To assess sponsors' Pharmacy and Therapeutics (P&T) committees'
conflict-of interest-definitions.
2. To determine whether sponsors' P&T committees established objective
processes to determine and manage committee members' conflicts of interest.
3. To determine whether the Centers for Medicare & Medicaid Services
(CMS) oversee sponsors' P&T committee compliance with
conflict-of-interest requirements.


Most sponsors' P&T committees had limited definitions of conflicts of
interest, which could prevent them from identifying conflicts
* Half of P&T committees' definitions did not address conflicts
prohibited by Federal regulations
* P&T committees' definitions did not always address relationships
with other entities that could benefit from formulary decisions
* More than two-thirds of P&T committees' definitions did not address

Many sponsors' P&T committees allowed members to determine and manage
their own conflicts of interest
* Nearly two-thirds of P&T committees relied on members to determine
whether financial interests constituted conflicts
* More than three-quarters of P&T committees relied on members to
recuse themselves from discussions and votes

CMS does not adequately oversee sponsors' P&T committee compliance with
Federal conflict-of-interest requirements
* CMS does not review P&T committee conflict-of-interest information
* Data discrepancies would prevent CMS from identifying with
certainty the members of each P&T committee

Conclusion and Recommendations

Our findings reveal that both sponsors and CMS conduct limited oversight
of P&T committee conflicts of interest, compromising their ability to
ensure that financial interests do not influence formulary decisions.
Specifically, we found that without direction and oversight from CMS,
many sponsors' P&T committees have limited oversight of members'
conflicts of interest. Additionally, we found that CMS does not
adequately oversee compliance with the Federal requirement that at least
one physician and at least one pharmacist on each committee be free of

To address limitations in how P&T committee members' conflicts are
defined, determined, and managed, we recommend that CMS:

* Define PBMs as Entities That Could Benefit From Formulary Decisions

* Establish Minimum Standards Requiring Sponsors To Ensure That
Safeguards Are Established To Prevent Improprieties Related to
Employment by the Entity That Maintains the P&T Committee

* Establish Minimum Standards Requiring Sponsors To Ensure That an
Objective Process Is Used To Determine Whether Disclosed Financial
Interests Are Conflicts

* Establish Minimum Standards Requiring Sponsors To Ensure That an
Objective Process Is Used To Manage Recusals Because of Conflicts of

* Oversee Compliance With Federal P&T Committee Conflict-of-Interest
Requirements and Guidance

Agency Comments and Office of Inspector General Response

CMS did not concur with our first and second recommendations, concurred
with part of our third and fourth recommendations, and concurred with
our fifth recommendation.

CMS maintained that it is not necessary to conduct additional P&T
committee conflict-of-interest oversight because current formulary
reviews and P&T committee audits appropriately protect beneficiaries
from any adverse effects of potential conflicts of interest.

If conflicts of interest among P&T committee members are not addressed,
beneficiaries may receive inferior therapies when safer or more
effective therapies are available, limited Medicare dollars may be
wasted to pay for inappropriate treatment, and public confidence in the
Federal Government may be undermined. In contrast, CMS asserts that
conflicts of interest would not disadvantage beneficiaries or the
Federal Government because it believes that formulary decisions
influenced by conflicts would result in higher premiums and the plan
would be priced out of the marketplace.


Comment: When the conservatives enacted the Part D drug program for
Medicare, they designed it as a private sector solution, using private
insurer sponsors and private pharmacy benefit managers (PBMs), while
specifically prohibiting any competing public drug plan.

An important function of these intermediaries is to select the drugs to
be covered through their formularies, balancing the adequacy of drug
selection with the opportunity for profit not only for the insurer
sponsors and the PBMs, but also for the pharmaceutical firms supplying
the drugs. This function is carried out by the sponsors' own Pharmacy
and Therapeutic (P&T) committees, and not by the government.

The potential for conflict of interest within these P&T committees is
enormous. This is why this report from the Office of the Inspector
General (OIG) is so important. The committee members are in a position
to advocate for the interests of the insurer sponsors, or the PBMs, or
the pharmaceutical firms. Decisions which benefit any or all of these
would likely be detrimental to the patients who pay premiums and a
portion of the Part D drug costs, and to the taxpayers who help fund the
Part D program of Medicare.

But don't worry. This program was set up to allow the free market to
work its magic. Apparently this is not only the agenda of the
conservatives who established this program, this laissez-faire approach
is also being followed by the current "liberal" administration.

In her letter in response to the OIG report, acting CMS administrator
Marilyn Tavenner wrote, "... if a P&T committee were to create a
formulary while operating under a potential conflict of interest,
because a discriminatory formulary would not be approved, the only
potential impact would be that the bid could be more expensive and,
therefore, less competitive. Beneficiaries could easily evaluate these
higher premiums in the marketplace and choose a more efficient plan to
meet their needs. As a result, we could expect that any authentic
conflicts of interest, given our level of formulary review, would
disadvantage the sponsor and not the beneficiary or Medicare program."
Note that this is the exact opposite of what is stated above.

Have you tried to shop for Part D plans? Though the premium might be the
first feature you see, the complexity of the various benefits, and
especially the differences in the formularies are very difficult to make
sense of. How can you look up medications that may be prescribed for you
next year when you don't even know what those medications are? And are
you really going to carry a formulary with you each time you see the doctor?

How nonsensical this dependency on the power of the market is can be
understood by comparing the prices we get through the privatized version
of the government Medicare Part D program, with the prices we get
through the government purchases of drugs for the VA system. The VA pays
about 40 percent less for drugs than paid under Medicare Part D (Austin
Frakt). It seems that the only magic in the marketplace is the increased
revenues that these intermediaries can glom off of us pathetic saps.

With HHS Secretary Kathleen Sebelius pushing private Medicare Advantage
plans (yesterday's message), and soon-to-be-confirmed CMS Administrator
Marilyn Tavenner pushing private Medicare Part D drug benefits, we have
the private sector pretty well covered. One more step to the defined
contribution premium support proposal and the private sector will have
it locked up.

Our love of the marketplace brings to mind Puck's comment to Oberon,
"Lord, what fools these mortals be!"

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