Legislation Would Halt Retroactive DIR Fees

HR 1038 would prohibit pharmacy benefit managers from charging direct and indirect remuneration fees.

Earlier this week, Reps Morgan Griffith (R-VA) and Peter Welch (D-VT) introduced the “Improving Transparency and Accuracy in Medicare Part D Drug Spending Act,” (HR 1038) which would put a stop to direct and indirect remuneration (DIR) fees that are charged by pharmacy benefit managers (PBMs).

PBMs have faced criticism due to recent reports that allege DIR fees increase costs for Medicare beneficiaries, and may harm the livelihood of pharmacies. While PBMs and support organizations state the fees reduce costs for consumers, pharmacies and advocacy groups have taken a stand against DIR fees.

The new bipartisan bill aims to put a stop to DIR fees on the grounds that they cause harm.

Under the bill, PBMs “may not retroactively reduce payment on such claim directly or indirectly through aggregated effective rate or otherwise except in the case such claim is found to not be a clean claim.”

The National Community Pharmacists Association (NCPA) endorsed the bill, showing their commitment to shedding light on PBM actions that may threaten community pharmacies.

"DIR fees are like the 'Sword of Damocles' hanging over pharmacies. Pharmacies dispense medication and are reimbursed, only to have a portion of that payment clawed back by PBMs weeks or months after the transaction,” NCPA CEO B. Douglas Hoey, RPh, MBA, said in a press release. “There's often little way to anticipate the fees, and pharmacists are seldom provided sufficient justification for the clawback. It's a maddening way to operate a business, so it's no wonder community pharmacists identified this as their top 2017 priority. NCPA strongly supports HR 1038 because, when enacted, it would end retroactive pharmacy DIR fees.”

In an interview, Susan Pilch, vice president of Policy and Regulatory Affairs for NCPA, told Specialty Pharmacy Times that PBMs charge DIR fees for their own profit, while patients, pharmacies, and the government are negatively affected.

The Pharmaceutical Care Management Association (PCMA) is on the other side of the issue, with strong feelings that PBMs and DIR fees help patients by reducing premiums. They believe that this newly introduced legislation will harm Medicare beneficiaries.

“Medicare Part D is overwhelmingly popular with a 90% satisfaction rate among enrollees. While this bill might increase drugstore profits, it would raise premiums for beneficiaries and increase costs for taxpayers,” PCMA said in a press release responding to the legislation. “A recent report by the Centers for Medicare & Medicaid Services (CMS) highlights how DIR reduces premiums for beneficiaries, which also leads to lower costs for the federal government.”

However, NCPA argues that the CMS report actually reveals how DIR fees push elderly beneficiaries into the Part D donut hole quicker. These beneficiaries progress to catastrophic coverage, where 80% of drug costs are paid for by the federal government.

"NCPA has been laser-focused for years on abuse by PBMs that threatens the viability of many community pharmacies. We were encouraged that CMS addressed our concerns with the recently released fact sheet,” Hoey said. “Now, we are heartened by this legislation and the momentum for prohibiting retroactive pharmacy DIR fees. A previous version of the bill generated plenty of bipartisan, bicameral support last year, even though it was introduced only weeks before the 114th Congress adjourned. Now the bill has been reintroduced. Supporting it is the right thing to do."

In an interview, with SPT, Ted Okon, executive director of the Community Oncology Alliance (COA), which commissioned a report on the harms of DIR fees, expressed support for the bill as well. Okon said that COA is taking steps to ensure the bill gets passed, including working closely with government officials to determine what makes a bill successful.

Yesterday, Sens Shelley Moore Capito (R-WV) and Jon Tester (D-MN) introduced a companion bill earlier this week, S 413.

Again, NCPA endorsed the bill, citing that it is important for DIR fees to be ended for the viability of pharmacies and the patients they serve.

"There is broad, bipartisan alarm in Congress and from Medicare officials over pharmacy DIR fees. S413 and its House counterpart, HR 1038, will help address the abuses that pharmacy DIR fees visit upon patients and pharmacies as well as the Medicare program and taxpayers,” Hoey said in the press release. “We will work aggressively for passage of this legislation,”

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