Affordable Care Act OTC provision unnecessarily burdens consumers, OTC Industry Association tells Congress in Subcommittee Hearing

Consumer Healthcare Products Association (CHPA) supports restoring over-the-counter medicines’ eligibility under Flexible Spending Arrangements

WASHINGTON, D.C. (April 25, 2012)—Consumer Healthcare Products Association (CHPA) President and CEO Scott M. Melville today urged Congress to restore over-the-counter (OTC) medicines’ eligibility under Flexible Spending Arrangements (FSAs) while testifying during the House Ways and Means Subcommittee on Oversight hearing on limitations on the purchase of OTCs with tax-advantaged accounts. Such accounts include healthcare FSAs, Health Savings Accounts (HSAs) and Health Reimbursement Accounts (HRAs). 

A provision of the Patient Protection and Affordable Care Act that went into effect on January 1, 2011, made OTC medicines ineligible for reimbursement under FSAs or other tax-preferred accounts without a prescription.

During his testimony, Melville said that the new law leaves consumers with three options: 
1) to seek an unnecessary appointment with a doctor to obtain a prescription and then submit the purchase for reimbursement under an FSA account; 2) to purchase the OTC medicine out-of-pocket, increasing the cost to the consumer by 10 percent to 35 percent, depending on the individual’s tax bracket; or 3) to forego treatment entirely, and suffer from the symptoms of the condition.

“None of these options are good healthcare policy.  None of these options increase healthcare access, but they do increase costs to consumers and to our healthcare system,” Melville said.

The broad availability of OTC medicines, 24/7, in a wide range of retail outlets including pharmacies, supermarkets, and convenience stores provides tremendous benefit to both consumers and our healthcare system.  In fact, a recent study by Booz & Company estimated that OTCs provide $102 billion dollars in savings to our nation’s healthcare system every year.  These benefits are realized through reduced doctor visits accounting for $77 billion of those savings and reduced drug costs accounting for $25 billion.   The study also reported that 240 million people each year treat illnesses with OTC medicines, bought off-the-shelf without a prescription. According to the study, an estimated 60 million of these consumers would not otherwise seek treatment if they could not purchase OTCs.

“Access to OTC medicines empowers consumers and allows them to take greater control over their healthcare and their healthcare spending. So do Flexible Spending Arrangements or FSAs, which were designed to help Americans afford the portions of healthcare costs not covered by insurance,” Melville added.

CHPA supports the Restoring Access to Medication Act (S.1368/H.R. 2529), the Patients’ Freedom to Choose Act (H.R. 605/S.312), and other efforts in Congress to repeal the OTC prohibition. 

CHPA’s written testimony can be viewed here.

Contact: Jenni Terry, 202.429.9260

CHPA is the 131-year-old-trade association representing U.S. manufacturers and distributors of over-the-counter medicines and dietary supplements.