Be Proactive Ahead of Upcoming DIR Fee Changes

They’re the bane of every pharmacy’s existence and in January 2024, big changes are coming to direct and indirect remuneration (DIR) fees. In a session at the National Community Pharmacists Association 2022 Annual Convention,¹ Tripp Logan, PharmD, co-owner of L&S Pharmacy and Medical Arts Pharmacy and Scott Pace, PharmD, JD, co-owner of Kavanaugh Pharmacy, explained what’s going to change and what these changes could mean for pharmacies in the near future.

Although there have been many complaints about DIR fees, ranging from who got preferred status to pharmacy benefit managers seizing the opportunity to make money, one of the biggest issues was the lack of transparency. A pharmacist could go weeks or months not knowing what the pharmacy would be paid for a dispensed drug. Beginning in January 2024, pharmacists will be able to see at point-of-sale what the lowest potential net price is for a drug.

For Logan, the DIR landscape in pharmacy reminds him of the hard times his farming family felt during the first half of the twentieth century. “What we’re going through right now is the Great Depression of community pharmacy,” he said. Good are expensive and the cost to dispense has risen, leading to sluggish cash flow. This has led to increased scrutiny in Logan’s pharmacies of every contract, the cost to dispense, and the benefits of centralizing business costs for all 3 locations. Expandingrevenue outside of dispensed prescriptions—such as immunizations, point-of-care testing, and medication management for patients with chronic conditions— s of utmost importance. For Pace, it’s the point-of-care testing that acts as a bellwether for his pharmacy.

Although the future may look grim, Logan is still glad that pharmacies have 18 months to prepare for the change, allowing for new relationships, new services, and new contracts to make up for continuing downturns in prescription dispensing revenue. “We're not surviving 18 months in our drugstore, dispensing prescriptions,” he said.

The next 18 months are the time to develop strategies, according to Pace. A pharmacy could keep $5 gross profit from COVID-19 boosters to develop a cushion for rainy days. Pace also recommended that pharmacies use the Open Enrollment period in October 2023 to look at the Medicare Plan Finder; this tool will provide the clearest indication of what might happen in 2024.

Taking the time to examine where the costs are in pharmacy can be beneficial too, even if it might mean having to shift wholesalers for better prices. Even looking at specific drugs dispensed could benefit the pharmacist: take the time to see if there’s an available therapy that doesn’t cost the patient more, has the same safety and efficacy profile, and nets a higher profit for the pharmacy.

Even with prescription profit decreasing and the looming DIR fee changes, Pace is optimistic. “If you bring a prescription into my pharmacy, in some form or fashion, I'm going to find a way to make that prescription profitable,” he said. “It may take a little extra work, but I'm going to find a way to do it.”

Drug Topics’ coverage of the 2022 NCPA Annual Convention and Expo is sponsored Prescryptive Health.

Reference

1. Logan T, Pace S. Coming changes to DIR: Avoiding cash flow crunch. Presented at: National Community Pharmacists Association 2022 Annual Convention; October 1-4, 2022; Kansas City, MO.