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Report finds pricing, oversight issues with federal comp drug program


A U.S. Department of Labor’s Office of Inspector General audit of its Office of Workers’ Compensation Programs found that the program failed to secure adequate pricing and oversight of prescriptions for the program, resulting in $321.3 million in excess spending.

In a report issued Tuesday, the audit found numerous problems with the Federal Employees’ Compensation Act program, which covers federal and postal workers, including that it “lacked a pharmacy benefit manager to help contain costs and had not determined if alternative prescription drug pricing methodologies would be more competitive.”

Outside auditors analyzed six years of pharmaceutical data and studied policies, procedures and other documentation. They also compared the FECA program to industry best practices and other workers compensation programs.

In addition to identifying excess spending during the audit period between 2015 and 2020, auditors found that OWCP did not effectively monitor pharmaceutical policy changes to ensure implementation, resulting in claimants receiving thousands of inappropriate prescriptions and potentially lethal drugs, including 1,330 prescriptions for fast-acting fentanyl, even after issuing a policy that restricted its use.

The audit also found OWCP failed to oversee prescription drugs that are highly scrutinized and rarely covered in workers compensation programs, and likely overspent on drugs “that may not have been necessary or appropriate.”

Auditors also found that OWCP lacked sufficient clinical expertise and guidelines to ensure appropriate pharmaceutical decisions, which could negatively impact claimants’ health, recovery and return to work.

The report included recommendations to strengthen management of pharmaceuticals in the FECA program, including that it ensures sufficient clinical expertise among staff, and that it uses evidence-based clinical guidelines to create prescription drug coverage policies. According to the report, the OWCP “generally agreed with the recommendations.”