OWCP Must Continue Strengthening Management of FECA Pharmaceuticals, Including Opioids

Hello, I’m Steve Sovich audit manager with the Department of Labor Office of Inspector General. The OIG has grown very concerned over the rapidly increasing costs questionable safety and likelihood of fraud associated with pharmaceutical benefits in the Federal Employee Compensation Act program, also known as the FECA program. Dramatic increases in compounded drug costs – from 2 million dollars in 2011 to 254 million dollars in 2016 – and dangers related to opioid abuse, have gained significant attention from Congress and the public. Although the costs of compounded drugs dropped to 18 million dollars in 2018, overall pharmaceutical costs remained at 262 million dollars for over 33,000 monthly average cases, of which 42% included opioid prescriptions We assessed the controls that the Office of Workers’ Compensation Programs, or OWCP, used for managing pharmaceutical benefits in the FECA program to determine whether OWCP effectively managed the use and cost of pharmaceuticals in that program. In May 2019, we issued a report that summarized the complete results of our work and augmented the findings from our first report, issued in May 2017. Overall, we found that OWCP must continue to strengthen its management of the use and cost of pharmaceuticals in the FECA program. OWCP has made progress in addressing recommendations from our first report, but more action is needed. Specifically, OWCP identified risks and implemented controls over compounded drugs and opioids, but it needs to further reduce risks for opioids. Our audit determined that OWCP s policy on opioids was too permissive, and OWCP had not developed sufficient controls to manage opioid addiction. In addition, OWCP didn’t do enough to ensure it paid the best price for prescription drugs. We found OWCP had not determined if alternative drug pricing methodologies would be more competitive, and had not used drug formulary lists or preferred providers. We also found OWCP had not implemented cost-limit checks on high or excessive drug charges, and had not ensured its generic drug policy was effective. OWCP could also do more to help ensure prescriptions are safe from overuse and adverse interaction with other medications. Our analysis revealed OWCP hadn’t implemented drug utilization reviews and quantity limits on initial fills and refills of maintenance drugs; hadn’t determined if classes of drugs other than compounded drugs and opioids should require prior authorization for medical necessity; and hadn’t monitored claimant and prescriber relationships to ensure drugs were prescribed by attending physicians. Finally, OWCP hadn’t reported excluded providers to the national healthcare fraud and abuse data collection program or accessed this data to ensure FECA providers were qualified. However, OWCP had taken actions to identify questionable providers, refer them to the OIG for investigation, and exclude providers who were convicted of fraud. In addition to the recommendations we made in our first report. We made seven new recommendations for the Director of OWCP to strengthen management of pharmaceuticals in the FECA program. To read the OIG’s full report, please visit our website at oig.dol.gov

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