Bipartisan Senate and House Letters Urge Medicare to Finalize Transparency Proposal

PRESS RELEASE

Sixteen United States Senators and 30 members of the House of Representatives recently wrote to the Centers for Medicare & Medicaid Services (CMS) urging the agency to finalize its proposed guidance on how Medicare prescription drug plan (PDP) sponsors report pharmacy price concessions, often referred to as direct and indirect remuneration (DIR) fees, to provide more accurate information to beneficiaries, pharmacies and the federal government.

Specifically, CMS' proposed guidance would standardize the reporting by PDP sponsors of price concessions received from, and incentive payments made to, participating network pharmacies. In addition, it would require that these "fees" be reflected or estimated at the point of sale—which would enable pharmacists to get an accurate picture of what their ultimate reimbursement amount will be.

The Senate letter led by Senators Shelley Moore Capito (R-W.Va.), Jon Tester (D-Mont.), Charles Grassley (R-Iowa) and Sherrod Brown (D-Ohio) largely focused on the impact DIR fees have on pharmacies stating, "DIR fees prevent the pharmacy from knowing the true reimbursement amount of drugs being dispensed at the point of sale, and in some cases DIR fees have resulted in preferred pharmacy prices appearing lower than they actually are."

The House letter led by Representatives Austin Scott (R-Ga.), David Loebsack (D-Iowa), Earl "Buddy" Carter (R-Ga.) and Peter Welch (D-Vt.) noted, "Current variations in the treatment of costs and price concessions affect beneficiary cost sharing, CMS payment to plans, federal reinsurance and low income cost-sharing (LIS), manufacturer coverage gap discount payments, and plan bids." The letter also highlighted CMS' authority to act in this area, "precedent does exist for the proposed guidance as CMS has previously had to take action concerning 'negotiated prices.'" In early 2009 during the final days of the Bush Administration, the agency moved to address discrepancies among PBMs when it came to "lock in" vs. "pass through" pricing, which caused problems in program management and integrity.

"NCPA thanks all of the lawmakers who voiced support for more transparency and accuracy in Medicare Part D by joining these letters," said National Community Pharmacists Association (NCPA) CEO B. Douglas Hoey, RPh, MBA. "Inconsistent reporting of DIR fees negatively affects beneficiaries who are trying to navigate and select coverage using Medicare's plan finder to and prevents small business independent pharmacies from knowing their true reimbursement rate at point of sale, ultimately impacting their ability make informed business decisions for the future. Reporting these fees at the point of sale would provide greater clarity to beneficiaries, pharmacies and Medicare as to the true costs of medications."

The CMS proposal has received previous support in Congress. In October 2015, 11 members of the House of Representatives sent a similar letter to CMS, and NCPA sent its own letter in January urging CMS to move forward with proposed guidance.