Understanding DIR Fees and DIR Reform


Direct and indirect remuneration (DIR) fees are imposed by pharmacy benefit managers (PBMs) on pharmacy providers after a drug claim has already been submitted, adjudicated, and even paid out to a pharmacy.

DIR fee reform has been on the forefront of many pharmacists' minds, but understanding the fees and how to combat them can be an incredibly complicated undertaking. At the 2019 McKesson ideaShare in Orlando, a forum discussion attempted to explain them and help provide takeaways for pharmacists and their businesses.

"DIR fees have increased 45,000% since 2010, with no savings passed on to beneficiaries," said Pete Slone, SVP of Public Affairs for McKesson. "This number will continue to grow if these practices are not reformed."

Direct and indirect remuneration (DIR) fees are imposed by pharmacy benefit managers (PBMs) on pharmacy providers after a drug claim has already been submitted, adjudicated, and even paid out to a pharmacy. Although originally created by the Centers for Medicare and Medicaid Services (CMS) to track annual price adjustments applied to prescription drug plans which impact the total cost of Medicare Part D medications, DIR fees are increasingly being manipulated and misused to claw back reimbursements to pharmacies for Medicare prescriptions, sometimes as much as a year after the transaction.

PBMs say that these fees are based on quality performance, but Slone said the fees lack transparency, can vary widely, and often do not reflect areas under a pharmacy's control.

DIR fees can be so significant that pharmacies may actually lose money dispensing a prescription, and some have been driven out of business. The fees are increasing patient financial toxicity and are making it even more difficult for pharmacists to care for patients in their own communities, according to the presentation.

Slone pointed out problems with DIR fees: they do not reduce the amount patients pay out-of-pocket for their prescriptions; pharmacists cannot accurately predict their reimbursement for a prescription; pharmacists do not have adequate recourse to an appeals process for unjust DIR fees; and the increase in DIR fees has significant implications for government spending in Medicare Part D.

Slone said McKesson has been very involved in DIR reform, especially by advocating for legislative changes.

"Working for NACDS and NCPA and the sponsor offices, we are pressing for modifications that will preclude any loopholes or workarounds that would have the same deleterious impact as DIR by a different name and means," Slone said.

Slone added that several opportunities for reform have been missed, but emphasized the importance of working together across political and industry lines to get the reforms passed.

"The administration had it within their reach, and yet completely dropped the ball on DIR reform by giving it but five lines in the final Part D rule after suggesting earlier that it suggested reform," Slone said. "Now we have to make sure that there are no more missed opportunities and break through the noise of the drug pricing debate to effect real change."


  • Audit Suggests PBM Drug Pricing Practices May Lead to Higher Health Care Costs
  • CMS Flinches, and Industry Breathes Sigh of Relief


Slone P., Lennartz, C., Cost, M., Chancy, H. "Those D*MN DIR Fees!" McKesson IdeaShare 2019: June 26-30, 2019; Orlando, FL.

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