NCPA, APhA, NACDS, NASP, Others Demand Action on DIR Fees

Several leading pharmacy groups wrote a letter to Department of Health and Human Services (HHS) Secretary Alex Azar, JD, saying that any action on a prescription drug rebate rule must address direct and indirect remuneration (DIR) fees.

The organizations include the National Community Pharmacists Association (NCPA), the American Pharmacists Association (APhA), the National Association of Chain Drug Stores (NACDS), the National Association of Specialty Pharmacy (NASP), the Food Industry Association (FMI), and the National Grocers Association (NGA).¹ In a press release, the groups said DIR fees are “skyrocketing fees extracted by pharmacy benefit managers [PBMs] on behalf of plan sponsors in Medicare Part D.”¹

Representatives from the organizations spoke with HHS last week before President Donald Trump signed several executive orders, including one that would address manufacturer rebates also collected by PBMs.¹ The order aims to direct drug rebates to patients instead of middlemen, specifically by excluding certain retrospective price reductions from safe harbor protection and establishing new safe harbors that would permit health plan sponsors, pharmacies, and PBMs to apply discounts at the point of sale.²

As HHS looks to complete the executive order, however, pharmacy groups expressed concern that the order does not address DIR fees.

“As the [executive office] calls for the HHS Secretary to complete the rulemaking process already commenced, our organizations can only support such a systemic change if any final rule also directly addresses and fixed pharmacy DIR fees,” the groups wrote in the letter. “The system contemplated by the rebate rule cannot go into effect without, at a minimum, ensuring that retroactive pharmacy DIR fees are eliminated, therefore saving Medicare beneficiaries at least $7.1 to $9.2 billion in reduced cost sharing over 10 years.”³

Both manufacturer rebates and DIR fees are designed to lower the cost of prescription drug coverage, but the pharmacy organizations argued that they conceal the true costs of medications because the fees are negotiated separately for thousands of drugs and outside the public view. Furthermore, the press release said that because the manufacturer rebates and DIR fees flow to PBMs and plan sponsors, they significantly increase the cost that patients pay at the pharmacy.¹

Still, a separate press release from NCPA said the organization remains “cautiously optimistic” about the revived rebate rule, which was originally proposed in 2019.⁴

“It is important to note that the agencies must now take [Trump’s] broad directives and turn them into regulations,” said NCPA CEO B. Douglas Hoey, BS Pharm, MBA, in a statement earlier this week. “This provides NCPA with an excellent chance to deal once and for all with pharmacy DIR fees.”⁴

REFERENCES

• Pharmacy Groups tell HHS that Any Action on Rebate Rule Must Involve Fixing Pharmacy DIR Fees [news release]. NASP; July 29, 2020. https://nasp.wildapricot.org/resources/7.29.2020%20-%20Pharmacy%20Groups%20tell%20HHS%20that%20Any%20Action%20on%20Rebate%20Rule%20Must%20Involve%20Fixing%20Pharmacy%20DIR%20Fees.pdf. Accessed July 30, 2020.
• Executive Order on Lowering Prices for Patients by Eliminating Kickbacks to Middlemen. White House; July 24, 2020. https://www.whitehouse.gov/presidential-actions/executive-order-lowering-prices-patients-eliminating-kickbacks-middlemen/. Accessed July 30, 2020.
• Re: Pharmacy DIR Fee Reform Inclusion with Administration Executive Order [Letter]. AphA, FMI, NACDS, NASP, NCPA, NGA, to HHS Secretary Alex Azar. July 28, 2020. https://ncpa.org/sites/default/files/2020-07/PharmacyOrgsRebateRuleEODIRResponse.7.28.20.pdf. Accessed July 30, 2020.
• Community Pharmacy Cautiously Optimistic About Executive Order Reviving the Rebate Rule [news release]. NCPA; July 27, 2020. https://ncpa.org/newsroom/news-releases/2020/07/27/community-pharmacy-cautiously-optimistic-about-executive-order/. Accessed July 30, 2020.