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NCPA CEO to Trump: Fix DIR fees to lower drug costs

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ALEXANDRIA, Va. In a letter to President Trump, National Community Pharmacists Association CEO B. Douglas Hoey says that as part of any efforts on drug pricing, the administration must eliminate back-door fees that insurance companies use to increase drug costs for seniors and gouge local pharmacies.

Doug Hoey

“Insurance companies are using their prescription drug management divisions – PBMs – to raise prescription prices on seniors at the pharmacy counter using a secretive payment system called pharmacy DIR. Pharmacy DIR fees increase prescription drug costs. Period. They are not only bad for seniors but are also detrimental to taxpayers and neighborhood pharmacies. If policymakers were to change the current policy and end the secretive rebate game without also reforming pharmacy DIR, there is no doubt in my mind that PBMs will maneuver to leverage even more DIR fees to make up the difference,” said Hoey. “To be effective, administration efforts on drug pricing must include pharmacy DIR fee reform, a vital component in truly lowering drug costs and maintaining access to community pharmacy services.”

Hoey’s letter follows reports that the administration may soon issue executive orders dealing with drug costs, potentially seeking to end the safe harbor protections for rebates paid by manufacturers to the PBMs owned by big insurance companies. NCPA had reservations about the administration’s previous rebate proposal, because pharmacy direct and indirect remuneration fee reform is needed to prevent PBMs from utilizing other forms of remuneration to make up for loss of revenue on the rebates.

Hoey pointed out that according to the Centers for Medicare & Medicaid Services, DIR fees shot up 45,000 percent between 2010 to 2017. An additional analysis released by XIL Consulting found that “DIR pharmacy fees overall have skyrocketed by 1,600% in the last five years, totaling $8.5B since 2013.”

“Independent pharmacies cannot withstand these increases. Seniors can’t afford to continue paying higher prescription prices at the pharmacy counter that wind up padding the pockets of large insurance companies,” said Hoey. “The PBMs are using the fees to drive community pharmacies out of businesses and patients will suffer most.”

Hoey pointed to a recent study in JAMA Network Open showing that older Americans visit community pharmacies almost twice as frequently as their primary care doctors. According to the research, patients visit local pharmacies 13 times per year, on average, compared to only seven visits to their doctors.

“Community pharmacies are the most accessible health care providers in the country, and DIR fees are shutting them down. The administration must fix this problem before it is too late,” said Hoey.


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