Senate Finance Committee Wants Trump Action on DIR Fees

Several pharmacy groups lauded a letter from the chairman and a majority of the Senate Finance Committee urging the Trump administration to reform direct and indirect remuneration (DIR) fees.

The letter, from Senate Finance Committee Chairman Chuck Grassley (R-IA), Ranking Member Ron Wyden (D-OR), and more than 80% of the Committee sent to Department of Health and Human Services (HHS) Secretary Alex Azar and Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma, requested that they use regulatory authority to reform direct and indirect remuneration (DIR) with respect to pharmacies under the Medicare Part D program.

Eight organizations representing pharmacy’s collective voice-including NACDS, NCPA, and APhA-lauded the request as “an essential part of a regulatory and legislative push to remedy a problem that becomes more dire with each passing day.”

In the letter, HHS is urged to “revive the pharmacy DIR reforms included in [CMS’] November 30, 2018 proposed rule, ‘Modernizing Part D and Medicare Advantage to Lower Drug Prices and Reduce Out-of-Pocket Expenses,’ (CMS-4180-P), and finalize them for plan year 2021.”

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“CMS documented an extraordinary 45,000 percent increase in DIR fees paid by pharmacies from 2010 to 2017. This is an untenable trend for pharmacies and causes higher prices for beneficiaries at the pharmacy counter,” the senators wrote in the letter. “Moving forward with the proposed reforms, we urge the agency to redefine ‘negotiated price’ to include all pharmacy price concessions at the point-of-sale and establish a broader definition of ‘price concession’ to bring clarity to the true price Medicare pays for a Part D drug and provide financial relief to beneficiaries, many of whom struggle to afford their medications.”

“This letter reflects the strong bipartisan recognition that pharmacy DIR fees must be stopped to prevent harm to patients and to the pharmacies that serve them – harm that is egregious and escalating. The Senate Finance Committee members stated clearly the importance of this issue to patients and to pharmacies; the concerns regarding Medicare Part D plan and pharmacy benefit manager (PBM) practices; the economic factors that are necessary to consider when accurately evaluating the importance of DIR fee relief; and the policies that are necessary to deliver true reform,” the pharmacy organizations said in a statement.

In addition to NACDS, NCPA, and APhA, the National Association of Specialty Pharmacy, the Food Marketing Institute, the National Grocers Association, the National Alliance of State Pharmacy Associations, and American Society of Consultant Pharmacists signed on to the joint statement.

“This is the breaking point, and there is no alternative but for both legislative and regulatory approaches to deliver a timely and comprehensive solution to change the definition of ‘negotiated price’ and to establish standardized pharmacy quality metrics,” the groups said. “DIR fee relief is absolutely essential for patients and for pharmacies now. It also is a necessary component of any effort to reduce patients’ out-of-pocket costs, to enhance transparency, and to foster the sustainability of Medicare.”

The Senate Finance Committee letter follows a legislative markup in July for the Prescription Drug Pricing Reduction Act (PDPRA) of 2019. Following that markup, the eight associations noted initial bipartisan progress on legislative language for direct and indirect remuneration (DIR) fee reform, but reiterated the need for swift and decisive action on this issue.