Two recent developments in the nation’s capitol — one at the Centers for Medicare and Medicaid Services, the other at the Supreme Court — merit close scrutiny from pharmacy operators and other large retailers. Impacting different aspects of the business, each of the moves by the federal government has the potential to produce significant consequences for companies and their customers.

Early this month, CMS issued a proposed rule that takes aim at direct and indirect remuneration. DIR enables sponsors of Medicare Part D and Medicare Advantage plans to claw back payments, sometimes months after a prescription has been filled, from pharmacies if they fail to meet certain criteria. With pharmacy benefits managers’ erratic application of DIR metrics, which are often murky to begin with, costs for beneficiaries are rising, and the long-term viability of pharmacies is threatened.

The proposed rule aims to lower out-of-pocket costs for prescription medications and enhance price transparency and market competition, according to CMS administrator Chiquita Brooks-LaSure. “We are dedicated to ensuring older Americans and those with disabilities who are served by the Medicare program have access to quality, affordable health care, including prescription drugs and therapies,” she says. “Today’s proposed actions follow our guiding principles by improving health equity and enhancing access to prescription medications.”

The changes, which would take effect at the start of 2023, are the result of a process that originated in 2018, when CMS asked for input from stakeholders on a proposed policy that would require Part D plans to apply price concessions obtained from pharmacies at the point of sale, thus reducing the cost-sharing burden on beneficiaries. The Biden administration deserves credit for picking up the thread and tackling persistent concerns about prescription drug prices and shoring up retail pharmacies.

Drug stores and other pharmacy operators are encouraged by the prospect of finally gaining some relief on an issue that they consider an existential threat, but they can’t afford to take anything for granted. The Department of Health and Human Services was apparently poised to implement a similar policy two years ago, when countervailing forces within the Trump White House sided with PBMs and other advocates of the status quo, scuttling the plan. A fierce battle can also be expected this time around.

On another front, the Supreme Court dealt a major blow to President Biden’s plans for combating the COVID pandemic when the justices voted 6 to 3 to block the Occupational Safety and Health Administration from requiring companies with 100 or more employees to ensure that workers are immunized against coronavirus or submit to weekly tests. The court found that the mandate, which would have affected 84 million people, was overly broad and went well beyond OSHA’s mission of keeping the workplace safe.

In a related 5 to 4 ruling, the court upheld CMS’ authority to require 10 million health care workers to be vaccinated. Joined by Chief Justice John Roberts and Justice Brett Kavanaugh, the liberals on the court found that CMS has the authority to act to protect the well-being of patients enrolled in the programs it administers.

Many retail and wholesale associations (some of which, including the National Retail Federation and FMI – The Food Industry Association, mounted a legal challenge to the employer mandate) hailed the Supreme Court’s action against the OSHA mandate.

“While NRF has maintained a strong and consistent position related to the importance of vaccines in helping to overcome this pandemic, the Supreme Court’s decision to stay OSHA’s onerous and unprecedented ETS [emergency temporary standard] is a significant victory for employers,” the association said in a statement. “OSHA clearly exceeded its authority promulgating its original mandate under emergency powers without giving stakeholders the benefit of a rule-making process.”

Supporters of the decision should be careful what they wish for. While the demise, at least temporarily, of the mandate for large employers solves myriad short-term problems for retailers, distributors and other businesses, it means that the most effective tool for controlling the pandemic will continue to be underutilized, a situation that is already creating serious problems.

With the rapid spread of the Omicron variant across the United States, many companies are encountering staffing shortages, causing them to reduce hours of operation and cut service levels. Drug stores and supermarkets are among those most affected. The situation could become a chronic problem as long as COVID remains unchecked and variants proliferate.

Seen in that light, the apparent win handed to retailers by the Supreme Court may be a pyrrhic victory. Much more promising is CMS’ move to reform DIR fees. With patience and persistence, retail pharmacy has a real opportunity to throw off a burden that has cast a cloud over its future.