NCPA Champions Bill to Boost Medicare Transparency, Ban Retroactive "DIR Fees"

SEPTEMBER 08, 2016

PRESS RELEASE

ALEXANDRIA, Va. (Sept. 8, 2016)  
The National Community Pharmacists Association (NCPA) today strongly endorsed new legislation that would increase transparency and accuracy in Medicare Part D prescription drug spending and reporting and also effectively ban so-called "DIR fees" applied retroactively that threaten the viability of many independent community pharmacies.

Reps. Morgan Griffith (R-Va.), Peter Welch (D-Vt.), Lou Barletta (R-Pa.), Rod Blum (R-Iowa), Earl "Buddy" Carter (R-Ga.), Rick Crawford (R-Ark.), Walter Jones (R-N.C.), Cathy McMorris Rodgers (R-Wash.) and Pete Sessions (R-Texas) today introduced the "Improving Transparency and Accuracy in Medicare Part D Spending Act," H.R. 5951. The legislation would address what has become a top concern for independent community pharmacy owners: huge clawbacks assessed by Medicare drug plans, or their intermediaries, pharmacy benefit manager (PBM) corporations, long after prescriptions are filled. These fees are often labeled direct and indirect remuneration, or DIR fees. H.R. 5951 would prohibit the imposition of such fees after pharmacies fill prescriptions.

"Independent community pharmacists are on the front lines helping Medicare beneficiaries access their prescription drugs and get the maximum benefit out of using them properly. Unfortunately, their efforts are greatly undermined by the imposition of huge retroactive fees by PBM corporations that further complicate Medicare drug costs," said NCPA CEO B. Douglas Hoey, RPh, MBA.

"NCPA staff and members have delivered that message to Congress and Medicare repeatedly to raise awareness of the need for action. We commend Reps. Griffith, Welch, and their colleagues on introducing this common-sense legislation to increase transparency in Medicare drug spending. I encourage all community pharmacists to urge their representative to cosponsor this legislation."

According to a recent NCPA survey of 640 community pharmacists, DIR fees are wreaking havoc. Two-thirds of pharmacists (67 percent) said they receive no information about when DIR fees will be collected or their size. Many said DIR fees can total thousands of dollars each month and make it impossible to determine at the time of dispensing whether the net reimbursement will cover their costs, such as purchasing drugs.

There is broad, bipartisan alarm in Congress and from Medicare officials over DIR fees. In response to concerns raised by NCPA staff and members, 18 U.S. Senators and 30 U.S. Representatives have written to the Centers for Medicare & Medicaid Services (CMS) to urge the agency to implement proposed guidance to address pharmacy price concessions like DIR fees. CMS has noted "variations in the treatment of costs and price concessions affect beneficiary cost sharing, CMS payments to plans, federal reinsurance and low income cost-sharing (LICS) subsidies, manufacturer coverage gap discount payments, and plan bids." NCPA continues to support that guidance in addition to H.R. 5951.

H.R. 5951 will lower cost-sharing for many beneficiaries and improve program integrity—without increasing Medicare Part D costs.

"Increasingly policymakers and the general public are calling for more transparency into prescription drug costs," Hoey added. "However, with the major escalation in DIR fees, PBM corporations are heading in exactly the opposite direction."

DIR fees that are not accounted for upfront inflate drug costs at the pharmacy counter, and therefore beneficiary cost sharing. Beneficiaries reach the "coverage gap" sooner and face increased coinsurance, which now applies to 58 percent of covered drugs, according to Avalere. DIR fees not accounted for upfront also lead to inaccurate prices on Medicare Plan Finder. 

In addition, H.R. 5951 would not increase Part D costs or prohibit "pay-for-performance" incentives in categories such as patient adherence to medication and avoidance of dangerous and costly drug interactions. 

"PBM corporation advocates have argued that DIR fees are payments that reward pharmacies," Hoey noted. "The reality is community pharmacies instead experience penalty-for-performance in order to pay PBM corporations huge DIR fees that they utilize for their own purposes and benefit."

The NCPA Annual Convention features a newly added program: Strategies to Combat DIRs. It will help independent community pharmacists know what they can do to manage the impact of DIR fees on the bottom line. More information on the meeting and registration is available at www.ncpanet.org/convention.



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