DIR fees take center stage in Congress

Press enter to search
Close search
Open Menu

DIR fees take center stage in Congress

By Richard Monks - 04/14/2017

Legislation pending in both houses of Congress regarding DIR, or direct and indirect remuneration, fees are giving hope to drug stores and two of the industry’s largest advocacy groups that pharmacy benefits management companies will stop retroactively reducing payments.


“DIR fees pick the pockets of community pharmacies and their patients,” National Community Pharmacists Association CEO Douglas Hoey wrote last month in an opinion piece in Morning Consult, an online service that provides daily email updates on Congress.


“Pharmacies dispense medication and are reimbursed, only to have a portion of that reimbursement then ‘clawed back’ by pharmacy benefit managers weeks or months after the transaction,” he added.


These sentiments are echoed by the National Association of Chain Drug Stores, which said that tacking on these fees after the fact can undermine a pharmacy’s ability to operate.


Spokesman Chris Krese has said assurances of a steady revenue stream are essential for pharmacies’ business planning, and that knowing what their prescription drug reimbursements will be is a critical part of that process. As a result, getting a handle on post-adjudication charges, such as DIR fees, needs to be made more transparent, he said.


As part of the Improving Transparency and Accuracy in Medicare Part D Drug Spending Act, originally introduced in the last session of Congress and reintroduced in the House of Representatives and Senate in February, Medicare Part D plan sponsors and pharmacy benefit managers would be prohibited from retroactively reducing payments on accurate reimbursement claims submitted by pharmacies. The proposed law would not ban DIR fees.


Reps. Morgan Griffith, R-W.Va., and Peter Welsh, D-Vt., introduced an identical bill in the House. Both pieces of legislation are pending in Congressional committees.


Stopping the retroactive reduction of payments, the bills’ sponsors said, would ensure that community pharmacies are able to continue serving Medicare beneficiaries and eliminate some of the growing financial uncertainties faced by community pharmacies.


“Community pharmacies are important to our small towns and rural areas, and must remain open and accessible to Medicare patients,” said Sen. Shelley Moore Capito, R-W.Va., who with Sen. Jon Tester, D-Mont., reintroduced the proposal in the Senate.


Advocates for PBMs, however, said the proposed law would undermine Medicare Part D and destabilize the program for millions of seniors.


“Simply put, the real reason drug stores attack DIR is that they don’t want to hold up their end of the contractual bargain and offer lower costs for Medicare beneficiaries,” said Charles Cote, VP strategic communications at the Pharmaceutical Care Management Association, in The Hill in March.


NCPA’s Hoey disagreed, saying that DIR fees distort the accuracy of drug cost information on the Medicare Plan Finder, making it harder for Part D beneficiaries to make critical decisions about their health care.