The reforms proposed by CMS are estimated to reduce seniors’ costs by $21.3 billion over 10 years.

ARLINGTON, Va. – The National Association of Chain Drug Stores (NACDS) on Friday lauded the Biden Administration for initiating action to rein in direct and indirect remuneration (DIR) fees and pledged continued vigilance to optimize the regulatory proposal for the benefit of seniors and for the viability of the pharmacies that serve them.

Steven Anderson

“DIR fees have needlessly inflated seniors’ out-of-pocket drug costs and have been a bane of pharmacies’ existence – and a threat to their existence – for more than a decade. NACDS welcomes the Biden Administration’s action, which is critical for retail pharmacies of all formats and sizes,” said NACDS president and CEO Steven Anderson.

“We will continue to engage and we will comment formally to help make the most of this moment. We also look forward to working with the administration, with Congress and with other key stakeholders for the establishment of consistent, relevant and workable pharmacy quality measures that are essential to the success of true DIR fee reform.”

The Biden Administration’s action came in the form of a Centers for Medicare & Medicaid Services (CMS) proposed rule for Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs. Released on January 6, 2022, the proposed rule is scheduled to be published on January 12, 2022, in the Federal Register.

The proposed rule would have the practical effect of preventing the needless inflation of seniors’ out-of-pocket drug costs that results from a current regulatory loophole. This same loophole jeopardizes pharmacy viability with unpredictable and often below-cost payments from payers to pharmacies for the medications that they dispense.

“NACDS expresses deep appreciation to the sponsors of the Pharmacy DIR Reform to Reduce Senior Drug Costs Act (S. 1909/H.R. 3554) in this Congress – and to those who have helped lead the charge for DIR fee reform in prior Congresses,” Anderson said. “We look forward to their continued leadership and engagement throughout the regulatory process and to address any and all remaining legislative needs.”

Sen. Jon Tester (D, MT), Sen. Shelley Moore Capito (R,WV), Sen. Sherrod Brown (D, OH), and Sen. James Lankford (R, OK) introduced the bill in the Senate; while Rep. Peter Welch (D, VT), Rep. Morgan Griffith (R, VA), Rep. Vicente Gonzalez (D, TX), Rep. Buddy Carter (R, GA), Rep. Raja Krishnamoorthi (D, IL), Rep. John Rose (R, TN), Rep. Abigail Spanberger (D, VA), and Rep. Diana Harshbarger (R, TN) introduced a similar bill in the House. Senate Finance Committee Chairman Ron Wyden (D, OR) has championed DIR fee reform in his leadership capacity, as did former Chairman Chuck Grassley (R, IA).

The reforms proposed by CMS are estimated to reduce seniors’ costs by $21.3 billion over 10 years. CMS states pharmacy DIR fees grew more than 107,400% between 2010 and 2020.

The Administration also issued a press release and fact sheet about the proposal, which would take effect on January 1, 2023.