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Washington, D.C.-A double-digit percentage increase for the fourth year in a row in average health care premiums for nine million federal employees, retirees and their families is "unacceptable," President Colleen M. Kelley of the National Treasury Employees Union said today. The Office of Personnel Management (OPM) attributed some 40 percent of the increase in 2001 premiums to "the rising cost of prescription drugs."

The NTEU president made her comment in the wake of an announcement by OPM that 2001 premiums for the nine million enrollees in the Federal Employees Health Benefits (FEHB) Program will rise by an average of 10.5 percent effective next January 1. FEHB is the nation's largest employer-sponsored health program; about 245 health insurers take part.

Kelley said she was especially disappointed in the link between the average premium increase and rising costs for prescription drugs, particularly since three of the largest drug companies in the nation had the week earlier refused to take part in a pilot program that could have resulted in lower costs for both federal employees and taxpayers.

She pointed to the recent actions of Pfizer, Merck and Parke-Davis in refusing to participate in an OPM-run pilot program that would have allowed one small FEHB plan to purchase prescription drugs at a discount from the Federal Supply Schedule (FSS).

"Despite the fact that increases in health care costs are outpacing inflation," Kelley said, "these drug companies refused to participate in this pilot that would have required them to sell three pills of every 1,000 they sell at a discount."

The three drug manufacturers refused to sell any prescription medications to the Special Agents Mutual Benefit Association (SAMBA) under the pilot program. Together, these three companies sell 90 percent of the drugs purchased by SAMBA's 16,000 enrollees. The pilot program would have saved both the SAMBA enrollees and taxpayers-who ultimately pay the government's share of FEHB premiumsC$2.4 million a year.

Kelley, who strongly supported the SAMBA pilot program in congressional testimony this summer, was especially critical of the drug companies' refusal because "it hurts FEHB's efforts to test using its massive buying power" to negotiate discount rates to help rein in the sharply-rising costs of health care.

"There is room in the health care industry for both profits and service to the public," Kelley said. "Clearly, that is a lesson the drug manufacturers have yet to learnCand we hope to bring that fact sharply into focus."

The union president said that even though the October 1 implementation of the premium conversion plan , which was successfully fought for by NTEU, will increase employees' take-home pay by allowing them to pay health care premiums with pretax salary, "there continues to be a pressing need to make health care more affordable."

NTEU is the largest independent federal union, representing more than 155,000 employees in 25 agencies and departments.