[World Labour Law News] US Labour Department Expands FECA Pharmacy Program

Editorial Team – [2026] 186 taxmann.com 347 (Article)

World Labour Law News provides a weekly snapshot of labour law developments from around the globe. Here’s a glimpse of the key labour law update this week.

1. Labour Law

1.1 US Department of Labour Announces Expansion of Pharmacy Benefit Program Under Federal Employees’ Compensation Act to Serve More Beneficiaries

On May 5, 2026, the U.S. Department of Labour’s Office of Workers’ Compensation Programs announced it is expanding the pharmacy benefit improvements under the Federal Employees’ Compensation Act program to include more beneficiaries, protect worker benefits, and dramatically improve drug pricing transparency.

This expansion will build upon the improvements made to the Federal Employees’ Compensation Act program initiated during the first Trump Administration. It will now serve claimants under the Black Lung Benefits Act, Longshore and Harbour Workers’ Compensation Act, and Energy Employees Occupational Illness Compensation Program Act. It will also allow the federal government to benefit from cost savings from pharmaceutical manufacturer rebates, enhance clinical safety, and improve pharmacy services for all beneficiaries that OWCP serves.

“These improvements deliver on President Trump’s promise to lower prescription drug prices for hardworking Americans and promote much-needed transparency in healthcare pricing,”

said Acting Secretary of Labour Keith Sonderling.

“The Department of Labour will continue to promote oversight and fiscal responsibility while safeguarding access to medically necessary prescription drugs.”

Following changes to the program first initiated by the Trump Administration in 2018, the benefit program reduced drug expenditures from approximately $226.2 million in calendar year 2018 to $39.8 million in calendar year 2025, representing a transformative 82.4% reduction in costs for taxpayers and the government, while maintaining quality care for injured workers.

This dramatic reduction in annual drug spending was driven by enhanced clinical management initiatives; rigorous oversight of the agency’s pharmacy benefit administrator; and data-driven waste, fraud, and abuse prevention and detection efforts.

OWCP’s approach to pharmacy benefits allows the government to maintain direct control over key policy decisions by setting program requirements and directing how claims are processed and paid. The agency works closely with the pharmacy benefits administrator to design formularies and a list of covered medications. This allows OWCP to maintain final approval authority over the formularies and to ensure that clinically effective, lower-cost medications are prioritised whenever appropriate.

“Through improved utilisation controls, enhanced pricing transparency, and continuous oversight, OWCP has demonstrated that it is possible to improve service delivery and clinical outcomes while significantly reducing costs to taxpayers,”

said Office of Workers’ Compensation Programs Director James Macy.

“Our agency remains committed to ensuring that injured workers receive appropriate, high-quality medical care while exercising responsible stewardship of taxpayer dollars.”

Source – Official Announcement

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