ALEXANDRIA, Va.  — The CEO of the country’s largest organization of community pharmacies today called for immediate action after the Centers for Medicare & Medicaid Services disclosed in a budget document that pharmacy benefit managers increased retroactive fees on pharmacies by an astonishing 91,500 percent in recent years.

B. Douglas Hoey

“This is absolutely unsustainable,” said B. Douglas Hoey, CEO of the National Community Pharmacists Association, which represents more than 21,000 independently owned pharmacies across the country.

Pharmacy benefit managers are companies hired by insurance plans, like Medicare, Medicaid, and private insurers, to administer prescription drug benefits. They determine which drugs are covered by insurance, which pharmacies patients must use, and how much pharmacies are reimbursed for the cost of dispensing drugs. Under CMS rules, they are also allowed to impose fees on pharmacies – direct and indirect remuneration fees – based on confusing, opaque, and often dubious pharmacy performance standards. Those fees have escalated rapidly in recent years largely without justification or benefit to patients, and they are driving independent pharmacies out of business.

According to the fiscal year 2022 budget justification (p.242) estimate sent to Congress by CMS, pharmacy DIR fees increased by 91,500 percent between 2010 and 2019. For context, a $4 gallon of milk increased by that much would cost $3,660.

“It’s completely out of control,” said Hoey. “The PBMs are pillaging pharmacies and increasing prescription costs on seniors needing their medications, and it’s way overdue for policymakers to act.”

The typical community pharmacy now pays roughly $81,000 per year in DIR fees, according to NCPA research. What’s worse, the fees are assessed long after the point of sale – sometimes months. The topsy-turvy growth of the fees combined with the surprise factor makes it impossible for community pharmacies to control their expenses or manage cash flow, threatening all pharmacy operations, from dispensing lifesaving medications to administering COVID-19 vaccines and testing.

In January, NCPA filed a federal suit against the Department of Health and Human Services to end the way DIR fees are assessed. Community pharmacies, the American Pharmacists Association, and the Coalition of State Rheumatology Organizations lawsuit cites a previous CMS estimate from 2017, which pegged the growth of DIR fees at 45,000 percent. The new estimate means fees more than doubled between then and 2019.

“PBMs are abusing the system, padding their profits at the expense of consumers, and driving local pharmacies out of business,” said Hoey. “Community pharmacies are essential health care providers. In many communities, they are the only accessible healthcare provider. Unless Congress and the administration put an end to this shakedown, those health care providers will disappear.”