5 Things You May Not Know About DIR Fees

Direct and indirect remuneration (DIR) fees have been a topic of controversy recently. These retroactive fees are implemented by pharmacy benefit managers (PBMs) to specialty and retail pharmacies to receive a cut of the revenue generated from prescription drug sales.

According to PBMs, these fees are the cost of doing business, but many pharmacies feel they are being taken advantage of. Some pharmacies feel that these fees can affect their ability to conduct their business, and can impact patient care.

5 Facts About DIR Fees:

1. DIR fees affect pharmacies and patients, alike

While DIR fees may be believed to only affect a pharmacy and their revenue, it also impacts out-of-pocket costs for patients. In a majority of cases, a patient’s co-pay amount is determined by the “full cost” of the drug, but DIR fees are not included in the cost because they are charged retroactively.

Since PBMs recoup the partial amount of the drug, patients are not being charged for the true cost, and may overpay by tens to hundreds of dollars, according to a report published by iMedicare.

2. DIR fees are not determined at the register

These fees are often issued during a standard measure, such as every quarter, rather than at the point of sale. This means that months after a pharmacy fills a prescription, they can receive a bill requiring them to pay the PBM a certain amount of money instead of subtracting the cost immediately.

3. DIR fees are often not itemized

In a recent survey conducted by the National Community Pharmacists Association, 73% of pharmacies reported not receiving an itemized list regarding what fees were being collected in relation to the claims. This approach lacks transparency, and can even result in PBMs clawing back too much money from the pharmacies. With a lack of itemization, pharmacies are left in the dark.

4. Taxpayers bear the burden of DIR fees

Implementing DIR fees causes increased, unknown cost-sharing for patients, including those insured through Medicare. These costs may cause Medicare beneficiaries to enter the prescription drug coverage donut hole, which is when they are responsible for 100% of prescription drug costs until they hit catastrophic coverage.

Once beneficiaries reach catastrophic coverage, Medicare, funded by taxpayers, covers 80% of the drugs, according to a new white paper commissioned by the Community Oncology Alliance. In essence, Americans are being affected by DIR fees at the register, as well as through taxes.

5. DIR fees may harm patients

With patients paying higher costs for prescription drugs due to DIR fees, adherence may suffer. Specifically, for Medicare, 25% of patients who have reached their Part D coverage gap fail to adhere to their medications, as reported in the white paper. Patients may be less inclined to take their medications properly, which can lead to the utilization of costly, but avoidable, health services.