DIR fees remain for now, but the fight goes on
We got some news from CMS this month that was disappointing, but not discouraging.
In its final rule for Medicare Part D, CMS announced that it would not move forward with a proposal to account for pharmacy price concessions—also known as direct and indirect remuneration (DIR) fees—at the point of sale in 2020 Part D plans. The move would not have eliminated DIR fees—it would have only ended the practice of extracting them retroactively.
We believe this was a missed opportunity to deliver real cost savings to Medicare beneficiaries, and we advocated for this change in our comment letter to CMS.
Assessed weeks or months after Part D beneficiaries’ prescriptions are filled, the retroactive fees complicate pharmacies’ decisions about staffing and whether to expand or even keep open a business. Pharmacies may not realize until long after a prescription is filled that they didn’t even recoup their costs. Further, patients pay higher out-of-pocket costs without benefiting from these price concessions at the pharmacy counter. There is simply no connection between price concessions given by manufacturers to PBMs and the prices paid by pharmacies to their wholesalers. Thus, retroactive DIR fees recovered from pharmacies by PBMs are totally irrational—they recover money from pharmacies needed to cover the cost of dispensing that pharmacies under PBM contracts did not receive in the first place.
Thousands of you submitted comments to CMS letting them know that applying price concessions at the point of sale was better than retroactive assessment for both patients and pharmacies. That did not go unnoticed.
CMS stated in the final rule that it “appreciates the over 4,000 comments that were received on this issue. CMS is continuing to carefully review these comments as we continue to consider policies that would lower prescription drug costs, address challenges that independent pharmacies face, and improve the quality of pharmacy care.” On May 17, the day after the rule was released, advisor to the HHS Secretary on Drug Pricing John O’Brien—a pharmacist—wrote a blog post that also indicated the agency is highly interested in ensuring discounts are provided to patients upfront.
Pharmacies must be reimbursed for the entire cost of medications dispensed. The cost of dispensing and related patient care services must also be adequately reimbursed under a sustainable business model that improves and does not disrupt our nation’s pharmacy distribution system. We’re seeing pharmacies disrupted and under water with reimbursement cut staffing to keep the doors open. This dramatically affects pharmacies’ ability to provide care. Any performance-based risk and payment mechanisms must be based on what pharmacies do or don’t do to affect patient care, not on what the product costs that pharmacy to purchase for beneficiaries.
Eliminating retroactive DIR fees would be a good first step, so long as they aren’t replaced with other differently named, but similar fees. In recent days, we’ve seen some leadership in Congress that may seek a legislative fix to provide relief. APhA will continue our work with the administration and Congress to increase transparency of PBM practices for pharmacies and patients to lower prescription drug costs and improve the quality of care.