Pharmacy groups to HHS: Drug rebate rule must fix pharmacy DIR fees

A big swath of pharmacy groups continue to work together to get the Trump administration to address pharmacy DIR fees in a forthcoming drug rebate rule from the Centers for Medicare and Medicaid Services. 

The pharmacy groups, which include the National Community Pharmacists Association, the American Pharmacists Association, the National Association of Chain Drug Stores, the National Association of Specialty Pharmacy, FMI – The Food Industry Association, and the National Grocers Association, sent a letter today to Department of Health and Human Services Sec. Alex Azar reminding the administration of the ongoing impact of pharmacy DIR fees imposed by Medicare Part D plan sponsors and their pharmacy benefit managers on its members.

The groups said that pharmacy DIR fees are growing beyond CMS’ year-over-year projection of 10% and noted that the growth of these fees is especially unsustainable during the current COVID-19 public health emergency. The groups said their members, which span every aspect of the pharmacy industry, care for patients, while also providing necessary access to COVID-19 tests and related services.

“If pharmacy DIR fees are not addressed in a forthcoming rebate rule, the impact on our members and their ability to care for patients in such a system will prove detrimental," the letter said. "Our organizations have previously weighed in on the possible dire impact of the rebate rule on pharmacies, namely late payments, lack of transparency to pharmacy reimbursement or chargeback amounts at the point of sale, unclear regulatory oversight, and costs associated with implementing such system contemplated by the proposed rebate rule. Without pharmacy DIR fee reform, the impact of implementing a system to pass rebates onto patients at the pharmacy counter may prove disastrous for pharmacies."

Representatives of the groups spoke with HHS last week prior to the president’s signing of several executive orders, including one that would address manufacturer rebates also collected by PBMs on behalf of plan sponsors. Manufacturer rebates and pharmacy DIR fees ostensibly lower the cost of providing prescription drug coverage, but because they’re negotiated separately for thousands of drugs far outside the public view, pharmacy groups said they conceal the true cost of prescription medicine. And because the manufacturer rebates and pharmacy DIR fees flow to the PBMs and plan sponsors — and not patients — they significantly increase the cost of medicine that patients pay at the pharmacy counter, the groups said.

“As the EO calls for the HHS Secretary to complete the rulemaking process already commenced, our organizations can only support such a systemic change if any final rule also directly addresses and fixes pharmacy DIR fees,” the group warned. “The system contemplated by the rebate rule cannot go into effect without, at a minimum, ensuring that retroactive pharmacy DIR fees are eliminated, therefore saving Medicare beneficiaries at least $7.1 to $9.2 billion in reduced cost-sharing over 10 years.”