Medicare Drug Committees Lack COI Oversight

Here is yet another sobering dispatch about a conflict of interest that affects prescription drugs. A new report finds that pharmacy and therapeutic committees that make formulary coverage decisions for Medicare Part D plans have limited oversight of conflicts held by committee members. As a result, the insurers lack the ability to prevent financial interests from influencing coverage decisions.

These committees, which are run by the private insurers that contract with the Centers for Medicare & Medicaid Services, have limited definitions of conflicts of interest, which can prevent them from identifying conflicts. And many committees allow members to determine and manage their own conflicts, according to the report, which was issued by the Office of Inspector General at the US Department of Health & Human Services. The OIG examined records from 111 committees that create and run drug formularies.

Moreover, there another disturbing finding: CMS does not adequately oversee compliance. At least two members on each committee must be independent and free of conflict with both insurers, pharmacy benefit managers and drugmakers. During 2010, which was the period analyzed, CMS never conducted audits. "Had CMS tried to review the information, it would have found the data unusable because of dicrepancies," the report states.

The implications are potentially far reaching, because there were 31 million beneficiaries who are 65 years and older who were enrolled in Part D plans as of March 2012, according to the report. And of course, so many seniors use multiple medications for chronic, as well as acute ailments. In short, this means there is, essentially, no check or balance on decisionmakers who can so easily sway usage toward any given drug.

"If conflicts 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 undermind," the OIG wrote.

This is the second time in recent weeks that concerns have been raised about conflicts of interest involving a federal healthcare program. A study in JAMA Internal Medicine recently found that many of the state Medicaid drug selection committees lack sufficient conflicts policies for adequately protecting the decisions for choosing medicines. Consider that Medicare and Medicaid account for more than 30 percent of all retail spending on drugs (back story).

So what to do? The OIG recommends that CMS direct insurers to ensure that safeguards are in place to mitigate conflicts related to employment by the entity managing the P&T committee; direct insurers to maintain an objective process for determining and managing conflicts; and make sure that at least two committee members are independent and free of conflicts.

For its part, CMS did not agree with parts of the report. For instance, the agency believes current formulary reviews and committee audits protect Medicare beneficiaries from conflicts. CMS argues, for instance, that formulary decisions influenced by conflicts would likely result in higher premiums, and plans would be priced out of the marketplace. But as OIG points out, this assumes beneficiaries make all decisions based on cost.

CMS also argued that the newly enacted Sunshine Act, which requires drugmakers to disclose financial relationships with physicians, should satisfy some disclosure requirements. However, the OIG noted that the law does not pertain to pharmacists, which populate many P&T committees around the country. In effect, CMS officials are overlooking a sizeable loophole.

Want to read more? Here is the OIG report.