Tip of the Week: Keep Up With Issues Affecting Pharmacy Viability

Although pharmacy benefit managers (PBMs) have been employing direct and indirect remuneration (DIR) fees for many years, those fees are coming under increased scrutiny by pharmacy players and, more recently, legislators and other policymakers.

DIR fees originated with the inception of Medicare Part D and were intended to offer incentives instead of a way to claw back from pharmacies. DIR fees were initially rebates, cash discounts, coupons, and goods in kind that would bring down the contracted price with Medicare. PBMs have long claimed that those fees are necessary to lower drug prices. However, it has become increasingly obvious that they are used as a method to further reduce pharmacy margins and enhance profitability of PBMs. Frustration has grown over the lack of transparency for calculating these fees, their implementation well beyond Part D prescriptions, and their increasing prevalence and amount charged.

Reporter Rachel Balick provided an interesting report on DIR fees.¹ In December 2019, U.S. Senate Finance Committee leadership released a version of the bipartisan Prescription Drug Pricing Reduction Act (S. 2543) that would require price concessions to be included in the negotiated price at point of sale under Medicare Part D. It also prohibits point-of-sale bonuses. The White House expressed support for S. 2543. The U.S. House, though, had introduced their bill (H.R. 3), which the Senate opposes, and which does not have anything about DIR fees in it but is aimed more broadly at lowering prescription drug prices.¹

Further action on these and other bills were postponed. Still, the Senate Finance Committee sent a bipartisan letter to the Secretary of the Department of Health and Human Services expressing their disappointment that CMS did not finalize the Medicare Part D rule. The CMS Office of the Actuary scores the legislation dealing with DIR fees as having a relatively high price tag. This and other events prompted cooperation and more concerted efforts from national organizations like the American Pharmacists Association (APhA) and the National Association of Chain Drug Stores (NACDS) to lobby for DIR fee and other PBM reforms. CMS contends that while it is sensitive to the issues surrounding drug prices, transparency, and economic viability of pharmacies, its primary concern is avoidance of legislation or rules that might increase beneficiary premiums.¹

APhA Senior Lobbyist Alicia Kerry Mica stated that they have not been as successful as they’d like in getting CMS to see the salience of what patients are paying (in deductibles and other cost-sharing) for their prescriptions, as opposed to a more singular focus on monthly premiums.¹ Balick reported further that pharmacy leaders see DIR fees and pharmacist provider status as inextricably linked, because pharmacists’ ability to provide patient care services is hindered by current practicing practices that have hurt community pharmacies.¹

The wheels of change are always turning, but sometimes less quickly than we hope. It is important that our national and even state and local professional pharmacy organizations are coming together as a voice for the profession. Various states have indeed passed certain legislation to improve PBM transparency, and other states like California are digging really deeply into these issues. The extent to which current and future legislation will impact the practices around DIR fees remain to be seen. Pharmacists should support not only professional organizations, but also patient advocacy groups working to improve drug price transparency and access. Pharmacy managers should keep abreast and do what they can to agitate for positive change.

Additional information about Third Party Considerations can be found in Pharmacy Management: Essentials for All Practice Settings, 5e.

About the Author

Shane P. Desselle, RPh, PhD, FAPhA, is a professor of social and behavioral pharmacy at the Touro University California College of Pharmacy.

Reference

Balick R. The status of DIR fees: Your questions answered. Pharmacy Today. January, 2020:38-39.