PBMs and DIR Fees: Where's the Data?

Direct and indirect remuneration (DIR) fees are an issue that has caused outrage among a majority of pharmacy providers. These fees are charged by pharmacy benefit managers (PBMs) to pharmacies who operate within the network months after the initial transaction.

While some have strongly criticized these fees, PBMs have responded by saying that DIR fees are charged to ensure that pharmacies are providing the best care, and to reduce premiums for Medicare beneficiaries.

The Pharmaceutical Care Management Association (PCMA), a support organization that advocates for PBMs, has spoken out against those attacking PBMs for charging DIR fees.

“They don’t harm the health industry in any way. They only help it,” PCMA President and CEO Mark Merritt told Specialty Pharmacy Times in an interview. “It reduces costs for consumers and for Medicare. The reason people attack DIR is they sign a contract to pay for it, and then they don’t want to hold up their end of the bargain. The reality is payers are going to demand discounts, concession, and rebates to reduce costs to pass those savings along to consumers.”

PCMA argues that recently published reports about DIR fees are inaccurate, and spreading misinformation. However, the Community Oncology Alliance (COA), who commissioned a report highlighting how DIR fees can harm patients, counters that there is limited evidence to support the stance of PBMs.

“We have a huge problem with this. There is no transparency or data,” said Ted Okon, executive director of COA. “If you listen to the arguments that come back from the PBMs and their association, other than simply discrediting reports, saying they’re doing it right, and that they report all DIR fees back, there’s no data or transparency to back that up.”

CVS Health, a PBM that covers thousands of patients, said in a press release that DIR fees ensure pharmacies are performing well and serving patients properly. They also said that their profit margins would remain unchanged if DIR fees were stopped, which they state reinforces the notion that PBMs are not gaining much from these fees.

COA points to the fact that PBMs have said that DIR fees reduce costs for patients and impact the healthcare space positively, but Okon noted that there are no statistics that support this claim.

In the COA white paper, the authors used data to show how DIR fees can cause Medicare beneficiaries to enter the coverage donut hole, and consequently, reach catastrophic coverage faster than normal. This practice causes the federal government to take on cost sharing, while PBMs make a profit, according to the report.

Okon said that Friar Levitt, COA’s law firm, spent many months researching DIR fees to ensure that their white paper was robust, and could be supported by statutes, regulations, and statistics.

“In the case where we have made specific legal arguments, the bottom line is there’s absolutely no rebuttal in terms of refuting specific statues or regulations,” Okon told SPT.

Despite statements that DIR fees help the healthcare industry, COA counters that there has been no data released that supports this position.

“It’s very easy to make a claim that a report is erroneous or that rebates don’t cause price increases, but the data is very clear,” Okon said. “The data, from a number of different sources, shows the growing divide between list and net prices. It’s very clear that spending continues to march up, even though the PBMs say they’re doing their job.”

COA stated in the report that these fees are a way for PBMs to generate substantial profit at the cost of patients and the federal government. Since these fees are not transparent, pharmacies do not have any idea of what they are being charged for, and whether the money will go back to the federal government.

“A pharmacy is going out on a limb acquiring the drug, having the personnel to dispense the drug, doing the education at point of sale, and then doing the follow-up” Okon told SPT. “It’s very clear what a pharmacy provider is doing. What is a PBM doing, other than sending out a bill and then basically collecting a fee?”

Okon added that if DIR fees are not eliminated, healthcare spending will continue to increase, and could place the health of patients at risk.

“DIR fees have become so pronounced and so big,” Okon added. “The more we look at it, and the more we dig into it, it’s mind boggling that this is just a money-making scheme.”

Editor's Note: Specialty Pharmacy Times provides balanced and fair coverage to both sides of the direct and indirect remuneration issue and does not advocate a position, but instead provides a platform for various stakeholders to express their viewpoints.