The bill's sponsor says the measure aims to "ensure program integrity, transparency, and cost savings in the pricing and contracting of prescription drug benefits under the Federal Employees Health Benefits Program."

According to Dow Jones Newswires, the FEHBP represents "some $2.5 billion in revenue, or roughly 12 cents in annual earnings a share, for Medco Health Solutions Inc. (MHS) and $4 billion in revenue, or about 3 cents a share, for CVS Caremark Corp. (CVS), according to J.P. Morgan, which expects the legislation to pressure PBM shares in the near term.

One section of the bill poses a particular problem for CVS Caremark as it would ban PBMs that own or are owned by pharmacy retailers from participating in the program.

Pharmacy benefit managers would have to return 99% of all rebates, market-share incentives and other money received from pharmaceutical manufacturers for FEHBP business.

The bill also would ban drug switching in the program without prior physician approval, impose new disclosure and transparency requirements and cap drug prices paid by the FEHBP at the average manufacturer price, known as AMP."

"Through strong oversight provisions that allow for alternative prescription drug benefit contracting and pricing for the FEHBP, my legislation will serve to enhance accountability and transparency" in the program, Lynch told Dow Jones Newswires. The bill also would safeguard against potential waste and fraud, and better ensure that federal workers receive safe, low-cost drugs, he said.

The Pharmaceutical Care Management Association (PCMA), which represents the nation's pharmacy benefit managers, has strongly opposed the measure.

The association has issued the following statement:

"Congress has enough on its plate without also trying new experiments on the successful Federal Employees Health Benefits Program (FEHBP), one of our nation's most proven health benefit programs. FEHBP is one of the best-functioning, well-regarded health programs in America and should not be subject to wholesale political changes.

Health care changes must improve quality, lower costs, and enhance choice and competition. This new legislation runs counter to these goals by radically changing the way federal employees' prescription drug benefits are administered and would make the FEHBP operate more like those provided through other federal agencies that significantly limit prescription drug choices.

The legislation would force mandated disclosure of sensitive pricing information, giving the upper-hand to drug makers and drug stores to charge higher prices at the expense of federal employees. Numerous economists and budget experts — including the Federal Trade Commission — have explored this issue and found that the wrong kind of transparency increases, rather than decreases, costs.

The federal government uses pharmacy benefit managers (PBMs) to ensure that its employees have the most affordable, safe, flexible, and generous prescription drug benefits possible. PBMs lower drug benefit costs by encouraging the use of generic drug alternatives, negotiating discounts from manufacturers and drug stores, saving money with home delivery, and using health information technology like e-prescribing to reduce waste and improve patient safety.

The utilization of these tools is important as the FEHBP is designed to keep the federal government competitive in attracting and retaining personnel who might otherwise choose to work in the private sector. This private sector approach is much different from the ones used by other government programs such as the Veterans Administration (VA). To save money, those programs simply use artificial price controls, severely restrict drug choices and, in the case of the VA, include only a handful of the nation's 60,000 pharmacies in their networks. The draconian steps included in this legislation would significantly undermine the goals of the Office of Personnel Management (OPM).

OPM can and does periodically audit, review, and change the way it manages FEHBP drug benefits. Policymakers should be wary of this legislation and any potential changes that would disrupt benefits for millions of federal workers, especially when considering that a recent OPM survey found that the overwhelming majority of federal employees are satisfied with their health benefits by an almost 7-to-1 margin."