Coalition urges Congress to repeal pending FSA change, calls policy 'unwarranted'

WASHINGTON — A coalition of six associations, including the Consumer Healthcare Products Association and the National Association of Chain Drug Stores, on Thursday called on Congress to repeal the requirement that prevents consumers from using their flexible spending accounts to purchase over-the-counter medicines without a prescription as of Jan. 1.

“This new restriction will eliminate a tool that 35 million Americans have come to depend on to cost-effectively purchase medicines they need, when they need them,” stated Scott Melville, CHPA president and CEO. “Meaningful healthcare reform is about increasing access and cutting costs,” he added. “Removing OTCs from FSA eligibility is counter to that philosophy and forces consumers to obtain a prescription to use money from their [FSAs] to purchase the OTC medicines they depend on as a first line of defense for their families’ healthcare needs.”

“As the face of neighborhood health care, pharmacies are in the business of providing remedies in an accessible, consumer-friendly way,” said Steve Anderson, NACDS president and CEO. “These new rules inject consumer confusion and logistical burdens that disrupt efficient patient care, at the exact time when patients are feeling their worst.”

In 2009, among individuals younger than 65 years with private health insurance, 20.4% had flexible spending accounts, according to the Centers for Disease Control and Prevention, up from 16.7% in 2007. Many industry pundits have surmised that increases in FSA utilization over the years can be traced to the inclusion of OTC medicines as eligible FSA expenses in 2003 and the increased availability of FSA debit cards that eliminated the need for a paper-receipt substantiation and reimbursement protocol for consumers.

The message being driven by the broad retail/supplier coalition resonates with another grassroots advocacy organization — Save Flexible Spending Plans — which also recently called on Congress to eliminate the new FSA requirement. “It was never a good idea to fund health reform on the backs of hardworking Americans who use flexible spending accounts to manage and contain health costs,” stated Joe Jackson, chairman of Save Flexible Spending Plans and CEO of WageWorks, a benefits provider based in San Mateo, Calif. “To improve and fix the health-reform law, Congress should quickly repeal the requirement starting Jan. 1, 2011, that a doctor’s prescription is needed for consumers to use their flex accounts to purchase over-the-counter medications, including Claritin, Zyrtec and Tylenol. This provision will not only drive up healthcare costs, but it [also] is an utter waste of consumers’ and physicians’ limited time.”

FSAs, which are offered by 85% of large employers, make everyday medical expenses more affordable. The availability of OTC medicines through an employer-sponsored FSA provides valuable cost-savings to consumers, increases worker productivity and encourages smart healthcare decisions by both employers and employees — all of which are consistent with the goals of healthcare reform, the coalition asserted.

Beyond the cost impact to consumers, the new rules represent a logistical quagmire for retailers who have made substantial investments into updating their point-of-sale systems. Once OTCs were determined eligible expenses under FSAs in 2003, retailers updated their POS systems so that consumers could readily use their FSA debit cards in the purchase of healthcare items at the pharmacy counter.

“The rules recently proposed by the Department of the Treasury go one step further and no longer allow consumers to purchase OTCs with their FSA debit and credit cards beginning on Jan. 15,” the letter to Congress read. “We believe that this policy is unwarranted, and retailers, pharmacies, pharmacists and manufacturers need more than two weeks to evaluate this policy. … Additionally, the short time frame for implementation does not adequately accommodate the major consumer-education and retail-systems modifications required to ensure effective implementation of the policy.”

In addition to CHPA and NACDS, the coalition includes the National Grocers Association, the Food Marketing Institute, the American Pharmacists Association and the National Community Pharmacists Association. All told, the coalition represents 39,000 pharmacies, 27,000 retail food stores, 62,000 pharmacists and the makers of OTC medicines

The coalition letter is available here.