Pharmacy Groups Praise Medicare DIR Fee Reform, But Have Concerns

Although several pharmacy groups praised the Centers for Medicare and Medicaid Services (CMS) final rule on retroactive direct and indirect remuneration (DIR) fees, they are concerned about the delay in implementation and other issues.

CMS’s final rule, Medicare Program; Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs¹ late last month. The rule’s provisions affecting DIR fees will take effect January 1, 2024.

Delaying implementation until 2024 is a missed opportunity for patients and pharmacies, according to the American Pharmacists Associaton (APhA), the National Community Pharmacists Association (NCPA), and other organizations.

“We’re disappointed that PBMs and their insurer-partners/owners have been given another year to manipulate the system and continue charging higher costs to seniors,” said NCPA CEO B. Douglas Hoey, R.Ph., in a news release.² 

“Further, the final rule does not prohibit [pharmacy benefit manager] contract terms that allow for penalty payments after prescriptions leave the pharmacy; therefore, retroactive penalties could still occur. CMS must close this loophole to accomplish the meaningful pharmacy DIR reform that so many of us have been fighting for,” Hoey added.

APhA praised the passage of the final rule and elimination of a proposed loophole “that would have left it up to the Part D plans and PBMs to determine how much, if any, of the pharmacy price concessions they would pass through to patients at the point of sale during the coverage gap in the Medicare Part D program,” APhA said in a news release.³

However, CMS’s final rule “merely moves the fees to the point-of-sale negotiated price. It does not eliminate these fees,” APhA said.

“Eliminating the retroactive use of DIR fees is a step in the right direction, but it’s only the tip of the iceberg to end PBMs’ business practices that are harmful to patients and hurt our nation’s pharmacies,” said Scott J. Knoer, MS, PharmD, executive vice president and CEO of APhA.

NACDS President and CEO Steven C. Anderson commended CMS for “initiating long-overdue reform of these dire DIR fees in a way that will benefit seniors.”⁴

“We appreciate that CMS finalized this rule, and improved the proposed rule according to some of NACDS’ recommendations…CMS took action to address transparency for all components of Medicare – including prescriptions filled for patients in the ‘coverage gap,’” Anderson said.

However, “It is vital for additional regulatory guardrails to be put into place and to prevent any unintended consequences that could harm patients and pharmacies alike,” Anderson noted.

“It is critically important that there be no further delays. Further, NACDS calls on Congress and on CMS to accomplish swiftly the additional comprehensive reforms that are essential for pharmacy viability and for patient access. The pro-patient and pro-pharmacy work that remains includes the establishment of standardized pharmacy quality measures, which merits an immediate legislative remedy,” Anderson added.

Leslie G. Sarasin, president and CEO of FMI-The Food Industry Association, also praised CMS but raised similar concerns as the other association executives.

 “FMI is pleased CMS has heard our long-held concerns about predatory PBM practices like retroactive DIR fees and determined that regulatory action is desperately needed to reduce drug costs for patients and to provide greater certainty for pharmacies so that they can remain in business and continue serving their customers,” Sarasin said in a news release.⁵ “However, even as we applaud these important reforms, we also believe the Biden administration missed an opportunity to provide swift relief to consumers and pharmacies alike by delaying the implementation of this rule until 2024.”

Despite their essential role in serving communities, particularly during the last 2 years amid the pandemic, supermarket pharmacies have struggled to stay in business or grow their pharmacy operations, especially in underserved areas, due to the anticompetitive practices of PBMs, Sarasin said.

In fact, some FMI members have been forced to close or sell their pharmacies due to “exorbitant” DIR fees, leading to significantly reduced access for consumers, according to Sarasin.

References

1. Final rule: Medicare program; Contract year 2023 policy and technical changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs. CMS. Published April 29, 2022. Accessed May 19, 2022. https://public-inspection.federalregister.gov/2022-09375.pdf 

2. NCPA: Final rule improves transparency; protections for patients and pharmaciesstill needed. News release. National Community Pharmacy Association. May 2, 2022. Accessed May 19, 2022. https://ncpa.org/newsroom/news-releases/2022/05/02/ncpa-final-rule-improves-transparency-protections-patients-and

3. APhA appreciates CMS’ elimination of retroactive DIR fees. News release. American Pharmacists Association. May 2, 2022. Accessed May 19, 2022. https://pharmacist.com/APhA-Press-Releases/apha-appreciates-cms-elimination-of-retroactive-dir-fees

4. With DIR feetransparency rulefinalized, NACDS urgescontinued push for comprehensive reform. News release. National Association of Chain Drug Stores.May 2, 2022. Accessed May 19, 2022. https://www.nacds.org/news/with-dir-fee-transparency-rule-finalized-nacds-urges-continued-push-for-comprehensive-reform/

5. FMI welcomes pharmacy DIR regulatory reforms to reduce drug costs and increase transparency, despite implementation delay. News release. FMI-The Food Industry Association. May 1, 2022. Accessed May19, 2022. https://www.fmi.org/newsroom/latest-news/view/2022/05/01/fmi-welcomes-pharmacy-dir-regulatory-reforms-to-reduce-drug-costs-and-increase-price-transparency-despite-implementation-delay