A government investigation found there is little oversight of conflicts of interest among the committees tasked with making drug formulary decisions for Medicare beneficiaries.

The HHS' inspector general's office reviewed how so-called Medicare Part D “pharmacy and therapeutics” committees define and manage conflicts of interest.

In a report released Tuesday, it recommended the CMS take steps to improve its oversight of pharmacy and therapeutics committees, as well as set standards for sponsor oversight of committee conflicts of interest.

Sponsors are private insurers that contract with the CMS to administer drug coverage to the 31 million Medicare beneficiaries who are currently enrolled in the Part D drug benefit. Sponsors manage their formularies or contract that responsibility to a pharmacy benefit manager.

“If conflicts of interest in the Part D program are undetected or not managed, 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 compromised,” the investigators concluded in the report.

The inspector general's office findings show a wide range of perspectives about what makes up a conflict of interest.

The investigators found that 53% of P&T committees said their conflict-of-interest definitions did not include financial interests with sponsors or drug manufacturers; 33% said they did not define financial interests in PBMs as conflicts; and 59% of sponsors' P&T committees allowed members to determine their own conflicts and recusals.

In addition, they said the CMS does not monitor either conflicts of interest on P&T committees or conflict-of-interest information that is required to be reported.

The limited oversight compromised P&T committees' “ability to ensure that financial interests do not influence formulary decisions,” according to the report.

The CMS did not agree with several of the HHS' inspector general's office's recommendations, including defining PBMs as organizations that could benefit from coverage decisions and directing sponsors to put standards in place that address conflicts of interest for individuals they employ.

“The CMS believes the agency's current Part D formulary review provides appropriate protections to beneficiaries from any adverse effects resulting from potential conflicts of interest,” CMS Acting Administrator Marilyn Tavenner wrote in a letter to HHS Inspector General Daniel Levinson.

The issue is also gaining attention at the state level. A study published last month in JAMA Internal Medicine found that conflict-of-interest policies for Medicaid drug formulary decisions vary state by state and may not protect against industry influence.