Do DIR Fees Stand a Chance in 2018?

Direct and indirect remuneration (DIR) fees were one of the most controversial topics in the pharmacy space in 2017, with many pharmacists calling on lawmakers to put a stop to these charges.

DIR fees were first implemented by the Centers for Medicare and Medicaid Services (CMS) to account for manufacturer rebates; however, pharmacy benefit managers (PBMs) used DIR to justify charging pharmacies retroactive, opaque fees, according to a session presented on March 7 during the 2018 Fifteenth Annual MHA Business Summit.

When DIR fees first surfaced, a majority of the general public were uninformed, but recently, government stakeholders and pharmacy advocacy groups gotten involved to raise awareness of the potential harm to pharmacies, Jonathan E. Levitt, Esq, founding partner, Frier Levitt, said during the presentation.

A majority of the audience felt that PBM profits are continuing to go up, while pharmacy profits are plummeting, largely due to DIR fees, according to the session.

Levitt also discussed how most PBM-owned pharmacies don’t “steal” Medicare prescriptions from pharmacies due to the opportunity to charge DIR fees. This practice is typically the opposite for privately-insured patients, whose prescriptions are often stolen, Levitt said.

According to the Medicare manual, pharmacies should be allowed into PBM networks and reimbursed reasonably.

“How many of you think that getting paid for less than you bought the drug for—you’re losing money on a drug—that’s reasonable?” Levitt asked the audience. “Well, it’s not reasonable and you should know there are things you can do about it.”

Levitt went on to discuss how PBMs are especially afraid of losing Medicare Star ratings and maximum allowable cost appeals. These may be the best way to fight back against PBMs and DIR fees.

PBMs may continue to charge DIR fees and continue other opaque practices unless there is stronger pushback, according to the session.

“One of the reasons why PBMs have expanded the use of DIR fees is because people aren’t fighting them enough,” Levitt said. “When people don’t fight back, PBMs are just going to keep doing it.”

Levitt noted that his firm has brought several lawsuits against PBMs over DIR fees and they have yet to hear a substantial legal argument about why the practice is admissible. There are also several white papers and guidances that discuss why DIR fees are illegal.

Although the future of DIR fees is uncertain, CMS recently issued a proposal that aims to increase transparency and target this practice. The 2019 DIR proposal makes positive changes to the Any Willing Provider law and moves the charges to the point of sale, according to Levitt.

Legislation and lawsuits, in addition to CMS changes, may help pharmacies remain profitable and put a stop to DIR fees, the session concluded.