DIR Fees

Rachel Balick

It’s been a stop-and-go journey toward the elimination of the retroactive direct and indirect remuneration (DIR) fees that are causing intense turmoil in the pharmacy community, particularly in the independent pharmacy space. APhA Senior Lobbyist Alicia Kerry Mica, a key player in the coalition of pharmacy stakeholders working to end abusive PBM practices, sat down with Pharmacy Today to share the good, the bad, and the ugly in the fight to end DIR fees.

Pharmacy Today: What do we know most recently about what’s happening with DIR fees in Congress?

Mica: We received some exciting news in early December that the Senate Finance Committee leadership, Sen. Chuck Grassley (R-IA) and Sen. Ron Wyden (D-OR) released a new version of the bipartisan Prescription Drug Pricing Reduction Act (S. 2543) that includes language that would require price concessions to be included in the negotiated price at point of sale under Medicare Part D starting January 1, 2022. It also prohibits plans from retroactively recouping fees but allows post–point-of-sale bonuses, and it moves up the timeline for standard quality metrics to 2022.

We had heard from several sources that a drug pricing bill was probably not going to see final passage before the end of 2019 because of unresolved conflicts between the House of Representatives and Senate. This is despite drug pricing being a key priority of both Congress and the president.

APhA continues to focus on DIR fee reforms in drug pricing legislation that is currently moving through Congress, in order to provide much-needed financial relief to pharmacies. The White House has expressed support for S. 2543. Conversely, the House voted on its version (H.R. 3) on December 12, 2019. That bill would allow the Secretary of Health and Human Services to negotiate certain drug prices, but the Senate opposes that.

While the government funding package in December is a possible vehicle for inclusion of drug pricing measures as well as a range of other topics, many Members of Congress believed action on drug pricing legislation would slip until 2020. [No votes had yet taken place at press time.]

Pharmacy Today: There was some action from mid- to late 2019. What happened?

Mica: The Senate released their bill text of the legislation that they marked up back in July 2019. Over on the House side, the Energy and Commerce Committee held a hearing on September 19, 2019, about H.R. 3, which is House Speaker Nancy Pelosi’s (D-CA) proposal related to drug pricing. That doesn’t have anything on DIR in it. In response, House Republicans introduced a bill that doesn’t include negotiating for prices to counter Pelosi’s legislation. We’ve been meeting with the House and Senate leadership to figure out a way for them to include some language that would prohibit PBMs from clawing back fees after point of sale.

I don’t want to stray from the subject, but it’s too big of an issue not to mention: While all this was going on, impeachment was taking every molecule of air out of the room.

Pharmacy Today: What was the reaction when Pelosi introduced H.R. 3, her long-awaited bill?

Mica: The day that Speaker Pelosi introduced her bill, the president tweeted his support for getting some type of drug pricing legislation through to his desk. That was almost like thumbing his nose at Republicans, who strongly opposed the speaker’s package because it was a unilaterally Democratic proposal—it includes things that are unpopular with House Republicans. But the day after Pelosi’s bill was introduced, the House decided to start an investigation into whether it should hold impeachment proceedings.

Pharmacy Today: What are the realistic chances of passing something?

Mica: It’s all up in the air on whether Congress will get something across the finish line in either chamber, but we have continued very specific talks on how we can move this.

In the midst of those efforts, the Senate Finance Committee sent a bipartisan letter to the Secretary of the Department of Health and Human Services Alex Azar expressing their disappointment that CMS did not finalize the Medicare Part D rule that would have assessed pharmacy price concessions and rebates—including DIR fees—paid from manufacturers to PBMs’ plans at the point of sale. Most likely nothing will come of that letter, but it was noteworthy that it was bipartisan.

The CMS Office of the Actuary scores the legislation dealing with DIR fees as having a pretty high price tag. We, of course, disagree with that. CMS is concerned that if they do away with DIR fees it will raise premiums for Medicare recipients. We also disagree with that, but that’s what we’re hearing on Capitol Hill about why they haven’t been willing to move something up to this point.

When the CMS rule was finalized without the language prohibiting DIR fees, APhA joined with the National Community Pharmacists Association, the National Association of Chain Drug Stores (NACDS), and the National Association of Specialty Pharmacy to do more concerted work on this on Capitol Hill. The coalition includes both chains and independents, and all players have been unified in our message to Congress that something needs to be done immediately to address pharmacy DIR fees in drug pricing legislation.

Pharmacy Today: Do Members of Congress and their staffs understand DIR fees and their consequences for pharmacies and patients?

Mica: On Capitol Hill, people are well aware of DIR fees and their impact on pharmacists and how they affect the feasibility of pharmacies staying in business. Pharmacists have done a really good job of helping Members of Congress understand the impact that DIR fees and other PBM practices have on their everyday business, so that’s positive. They know pharmacies can’t account for those fees.

APhA’s understanding from NACDS is that many grocery stores are not opening pharmacy components when they decide to open up new stores, and then there’s the Fred’s Pharmacy bankruptcy, and then the Walmart layoffs—so people get it. But they also are very concerned about Medicare premiums.

Someone recently said, “I see, I understand, I hear what you’re saying. However, the larger population of my constituency are Medicare recipients, and I can’t have their premiums increased, so if CMS says that these premiums are going to increase, I can’t take that political risk.” And I get that. However, we don’t think that ending DIR fees will increase premiums, but we don’t have a say in scoring this legislation. Only CMS and the Congressional Budget Office do.

Pharmacy Today: Premiums are what they are, but the problem that pharmacists see is what seniors pay at the pharmacy counter. Is there any consideration of how much the premium really matters if seniors then have high out-of-pocket costs at the pharmacy counter and confusion about the level to which their plan that they had last year is covering their drug this year? Is there an understanding of the need to balance out premiums with actual encounters at the pharmacy counter?

Mica: That doesn’t seem to be a message that we’ve been able to get across. Even though we’ve said that these fees could mean that patients get into the donut hole quicker and their out-of-pocket costs are higher, that doesn’t seem to resonate. It’s a very complicated issue to describe.

Pharmacy Today: There is a bill, the Phair Pricing Act (H.R. 1034/S. 640), that specifically targets DIR fees. Where does that stand?

Mica: The reason the coalition really rallied around the Phair Pricing Act—because there are several bills out there that would do away with DIR fees that have varying levels of support—is because it most closely mirrors the proposed rule that CMS did not finalize. The Phair Pricing Act has around 73 sponsors in the House. However, only 18 of them are Democrats, so we’ve been told that we need to have more Democrats on the bill before it can move forward as either a standalone bill or as part of a direct pricing package.

Pharmacy Today: Provider status remains a legislative priority for APhA, but DIR fees have taken center stage. What’s the reasoning behind that?

Mica: DIR fees are what are really hitting pharmacists right now. It does not diminish the work that we’re doing on provider status—we have never taken our foot off the pedal of working provider status on the regulatory front. The president issued an executive order on Medicare in October 2019. We’re working to get pharmacists included in that. But DIR fees are making pharmacists close their doors right this second, so getting some kind of very good change when it comes to DIR fees right now is extremely important.

[APhA CEO] Tom Menighan has also always acknowledged the fact that the appetite for taking up provider status with the large price tag that has been attached to it is just not feasible right now on Capitol Hill. We had very strong support for the concept of provider status, but we didn’t have the support for the bill we needed because it was so expensive.

But he also frequently notes that the two issues, provider status and DIR fees, are inextricably linked because pharmacists’ ability to provide patient care services is severely hindered by the current pricing practices that have decimated community pharmacies.