Retail industry groups push for pharmacy DIR reform

Hundreds of organizations representing the pharmacy industry, including supermarket pharmacies, are pushing for legislation that they say would stop the abuse of pharmacy price concessions charged by third-party middlemen — known as direct and indirect remuneration (DIR) fees — which have increased 91,500% in recent years.

The groups are voicing their support for The Pharmacy DIR Reform to Reduce Senior Drug Costs Act (S. 1909 / H.R. 3554), which was introduced in late May in the Senate by Sens. Jon Tester (D-Mont.) and Shelley Moore Capito (R-W.Va.), and in the House by Reps. Peter Welch (D-Vt.) and Morgan Griffith (R-Va.).

In a letter to Congress signed by 249 organizations, the groups explained how pharmacy DIR fees affect seniors and pharmacies.

The letter states, in part, “These fees, which lead to higher costs for beneficiaries at the pharmacy counter, impose ever‐increasing challenges on struggling seniors, putting them at risk for reduced medication adherence and poorer health outcomes. These fees also make it harder for pharmacies to continue operating and providing seniors and special needs populations with the medications and services they desperately need. Many pharmacies have closed over the past few years and have cited DIR fees as a primary cause. These pharmacy closures reduce access to vital healthcare services; especially in rural and underserved areas where healthcare options are already limited.

Related:FMI, NGA join pharmacy coalition backing DIR fee reform

“Pharmacy DIR fee reform is urgently needed. CMS has stated that eliminating retroactive pharmacy DIR fees will save beneficiaries an estimated $7.1-$9.2 billion in reduced cost sharing. This common-sense, bipartisan legislation would reduce beneficiary cost-sharing on drugs and eliminate the plans/PBMs clawing back fees from pharmacies, providing increased price transparency for patients and pharmacies. Importantly, this legislation would establish a new pharmacy performance system based on standardized, evidence-based measures to reward and improve quality of care provided by pharmacies.”

Along with FMI-The Food Industry Association, the National Grocers Association (NGA) and the National Association of Chain Drug Stores (NACDS), organizations voicing support for the bill include the National Community Pharmacists Association (NCPA), American Pharmacists Association (APhA), National Alliance of State Pharmacy Associations (NASPA), National Association of Specialty Pharmacy (NASP) and American Society of Consultant Pharmacists (ASCP).

NACDS President and CEO Steven C. Anderson noted, "NACDS appreciates the strong support of these 249 groups for DIR fee reform. This legislation is sorely needed to help reduce seniors' out-of-pocket drug costs and to preserve pharmacies' viability. This week alone, NACDS members also have sent nearly 9,000 letters to more than 90% of the U.S. Congress on this issue. The message is clear: solutions are needed to fix this dire situation for patients and for the pharmacies that serve them."

Related:FMI, NGA applaud Supreme Court decision clamping down on pharmacy benefit managers

DIR fees refer to post-point-of-sale compensation received by pharmacy benefit managers (PBMs) and Medicare Part D plan sponsors for prescription drugs. Used in the calculation of final Medicare payments to Part D plans, these fees primarily are rebates paid by drug manufacturers but also include concessions paid by pharmacies, such as pay-for-performance network fees and reimbursement reconciliations. As a result, DIR fees affect the final cost of a drug for payers and the price paid to pharmacies for a drug. 

A key focus of retail pharmacy industry efforts to crack down on DIR fees has been a lack of transparency for these costs and the fact that they’re often charged retroactively, after the point of sale for drugs dispensed to seniors under Part D. Pharmacies of all sizes have felt the financial squeeze, particularly small operators.