NASP Response to PCMA Comments Regarding DIR Fees

On behalf of NASP, I am writing to correct some misperceptions noted in the Specialty Pharmacy Times article citing the views of PCMA President and CEO Mark Merritt on Direct and Indirect Remuneration Fees. It is inaccurate to state that DIR Fees “don’t harm the health industry in any way; They only help it.” Unfortunately DIR Fees do harm the health industry, particularly as it relates to the negative impact on specialty pharmacy providers.

In applying DIR fee programs, PBMs have assessed DIR fees to all claims dispensed by specialty pharmacies, including high cost specialty medications and biologics. There are a substantial number of specialty products that after being subject to DIR fees, result in reimbursement to the specialty pharmacy at below the cost to acquire the products being dispensed, even before specialty pharmacies begin to provide the high touch services for which specialty pharmacies are contracted. There is no cap on the dollar figure of the percentage fee applied in some DIR Fee programs, resulting in upwards to $1,000 per prescription being pulled back from the specialty pharmacy.

Specialty pharmacies coordinate benefits investigation and administrative work on behalf of patients and prescribers to assure compliance with Payer Clinical Policy Bulletins and program benefits design. Specialty pharmacies provide patient education, training and support for therapy compliance across the therapy progression (which can be weeks, months, or years depending upon the disease), coordinate therapy dosing, manage multiple therapies to individual patients, manage side effects and therapy changes and report outcomes and performance data.

None of these services can be supported by negative margin on specialty biologics, before even starting the services mentioned above. This results in less than Fair Market Value reimbursement to specialty pharmacies, despite Medicare legislation providing for reasonable, Fair Market Value reimbursement to providers.

The substantial negative financial impact of these fees as constructed and applied by PBMs to specialty pharmacy forces pharmacies with the highest level of expertise and efficacy in supporting complex disease with high cost therapies to question their participation in Medicare networks, thereby risking a lack of willing providers for Medicare beneficiaries. Narrow access to critical on high cost therapies when patients and providers do not maintain persistency and compliance on therapy.

Health plans and referring prescribers consciously chose specialty pharmacies to manage these complex patients and rely on specialty pharmacies’ unique capabilities to maintain patient adherence with these therapies. The most expensive prescription to the healthcare system is the one that is not filled and failure to successfully start and complete medication therapy is one of healthcare’s biggest problems.

Moreover, the DIR programs administered by some PBMs are based upon performance criteria that simply do not apply to specialty pharmacies or the diseases they treat. This results in some PBM DIR programs assessing fees against specialty pharmacies for results these specialty pharmacies have no ability to influence, control or drive. And, the DIR fees are assessed against drugs unrelated to the performance criteria. It is charging fees for measuring “apples” while specialty

pharmacies dispense “oranges."

Many DIR performance metrics are pointed at STAR ratings, including measurements for treatment for conditions such as Diabetes and Statin adherence in Cardiovascular Disease — two conditions for which specialty therapies are not dispensed. This puts specialty pharmacies in the position of either (a) not being able to influence or impact disease therapy management but being negatively scored for not doing so or (b) not measuring specialty pharmacies for services that the PBMs, providers, patients and plan sponsors seek them to provide. Finally, the

retroactive methodology of applying the DIR fees essentially put pharmacies in the position where they do not know they are providing medicine below cost to a patient until well after the point of dispensing of the therapies.

As it relates to the impact on out of pocket costs, we are concerned that there has not been enough analysis done of the impact of DIR fees, applied after the point of sale without a direct refund to the paying patient as it relates to the high cost drugs in the specialty pharmacy channel. Given the high cost of biologic therapies (average monthly prescription in the range of $2,500 to $3,500) and increasing patient copayments, further study should be given to PCMA’s claim that DIR fees “actually help patients save money on premiums and out-of-pocket costs.”

We believe that any quality measurements applied to accredited specialty pharmacies must be applied prospectively, transparently, and ultimately result in reimbursement to the provider at a Fair Market Value for the drug and the unique services provided by specialty pharmacies. The savings effectuated by specialty pharmacies by providing strict dosing, counseling as to side effects, compliance and coordination management has been well-documented through numerous studies. NASP opposes percentage of drug cost penalties on specialty pharmaceuticals, given their high cost and the low margins with which specialty pharmacies support patients and prescribers.