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Coalition trains fire on DIR fees under Medicare Part D

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ALEXANDRIA, Va. — A group 118 health care stakeholders, including chain drug retailers, have called on Congress to crack down on direct and indirect remuneration (DIR) fees in Medicare Part D.

Mobilized by the National Community Pharmacists Association (NCPA), the broad coalition sent letters to the Senate and House of Representatives to voice their support of the Improving Transparency and Accuracy in Medicare Part D Drug Spending Act (S. 413/H.R. 1038). Signees included independent pharmacies, pharmacy trade groups, drug distributors, pharmacy buying groups, supermarket retailers, state pharmacist associations and health systems.

The legislation, introduced in the House and the Senate in February, would prohibit the application of DIR fees to pharmacies after the point of sale for prescription drugs dispensed to seniors under Part D.

“Retroactive pharmacy DIRs, often assessed weeks or even months after a prescription has been filled, prevent pharmacies from knowing at the time of dispensing what their true reimbursement will be for that prescription,” the coalition’s letters to Congress read. “The lack of transparency and the significant lag time in the pharmacy being notified about these retroactive fees creates an unnecessary burden on pharmacy operations and makes it very difficult to make decisions for the future.”

More than 95 health-focused organizations expressed their support in similar letters to the House and Senate last September, NCPA said. Now that the bills have been reintroduced in the 115th Congress, the number of signatories has grown.

Pharmacy retailers signing the letters included Bartell Drugs, Care Pharmacies, Discount Drug Mart, Fruth Pharmacy, Good Neighbor Pharmacy, Hartig Drug, Health Mart, Hi-School Pharmacy, HomeTown Pharmacy, Kinney Drugs, Kmart, Lewis Drug, Medicine Shoppe/Medicap, Osborn Drugs, Ritzman Pharmacy, Sav-Mor and U-Save-It Pharmacy.

Among drug wholesalers, signees included Burlington Drug, Dakota Drug, H.D. Smith, McKesson, Morris & Dickson, Mutual Wholesale Drug, Rochester Drug, Smith Drug and Value Drug.

The coalition noted in the letters that the Centers for Medicare and Medicaid Services (CMS) and the Medicare Payment Advisory Commission (MedPAC) have determined that pharmacy DIR fees add costs to seniors and the taxpayers who fund Medicare.

“Both CMS and MedPAC have raised concerns over the effects DIR has on patients and the Medicare program. CMS noted that DIR affects beneficiary cost sharing, CMS payments to plans and pushes patients into, and through, the coverage gap sooner,” the letters to the Senate and the House stated.

“Nearly all catastrophic costs are born by Medicare, and these costs have more than tripled since 2010.”
MedPAC also raised concerns about Medicare Part D DIR in its 2015 report to Congress. “Accounting for these fees at point of sale protects the integrity of the Medicare program, ensures beneficiaries are not being overcharged for their medications and can potentially lower overall costs as fewer beneficiaries reach the catastrophic phase,” the letters said.

Besides NCPA, industry associations signing the letters included the American Pharmacists Association, American Society of Consultant Pharmacists, Food Marketing Institute, National Alliance of State Pharmacy Associations, National Association of Specialty Pharmacy, National Grocers Association, PARD – An Association of Community Pharmacies, and Pharmacy Franchisees and Owners Association, as well as more than 40 state pharmacy associations, among other ­organizations.

“This commonsense legislation would bring greater transparency to pharmacy payments by informing pharmacies at the point of sale what their reimbursement will be for clean claim prescriptions and allow for better business planning,” the letters concluded. “Furthermore, it successfully achieves greater transparency while not interfering with the ability of pharmacy benefit managers to ensure improved pharmacy quality by creating incentive-based payment models that reward pharmacies for achieving contractual-based metrics.”


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