OIG Calls for Stronger Conflict-of-Interest Oversight for Medicare Part D P&T Committees

A recent OIG report, “Gaps in Oversight of Conflicts of Interest in Medicare Prescription Drug Decisions,” examines how Medicare Part D drug plan pharmacy and therapeutics (P&T) committees ensure that formulary decisions are not biased by conflicts of interest. Based on a survey of P&T committees and a review of their written policies, along with interviews with CMS, the OIG concluded 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.” For instance, most sponsors’ P&T committees have limited definitions of conflicts of interest (more than half did not define any financial interests with sponsors or pharmaceutical manufacturers as conflicts of interest), which the OIG believes could prevent them from identifying conflicts. Moreover, many sponsors’ P&T committees rely on their members to determine and manage their own conflicts. CMS also does not adequately oversee compliance with the regulatory requirement that at least two members on each P&T committee be independent and free of conflict relative to the plan sponsor and pharmaceutical manufacturers, according to the OIG. The OIG makes a series of recommendations intended to strengthen conflict-of-interest policies, including recommending that CMS: require P&T committee members to be free of conflict with any pharmacy benefit manager that manages a sponsor’s prescription drug benefit; direct sponsors to ensure that objective processes are used to determine and manage conflicts; and oversee sponsors’ compliance with the requirement that at least two committee members be independent and free of conflict.

GAO Finds Part D Coverage Gap Discount Program Did Not Spur Increased Drug Prices

The GAO has issued a report that responds to concerns raised by certain Democratic lawmakers that manufacturers participating in the Medicare Part D drug “Coverage Gap Discount Program” would raise prices for brand-name drugs used by beneficiaries in the coverage gap to offset the 50% discount that manufacturers must provide under the Affordable Care Act. Contrary to these concerns, the GAO found that prices for brand-name drugs used by beneficiaries in the coverage gap increased similarly to those used by beneficiaries who did not reach the gap, both before and after the Discount Program was implemented in January 2011. The GAO also reports that while pharmacy benefit managers (PBMs) interviewed believe that some manufacturers decreased brand name rebate amounts as a result of the Discount Program, most plan sponsors did not observe this, and manufacturers reported no effects on their rebate negotiations as a result of the Discount Program. Most sponsors and PBMs also reported that the Discount Program did not affect Part D plan formularies, plan benefit designs, or utilization management practices. The GAO cautioned that its findings are limited to those sponsors, PBMs, and manufacturers interviewed and may not be representative of the effects observed across all of these types of entities, and multiple factors besides the Discount Program can affect drug prices over time.

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