Resources Page: Proposed CMS rule DIR Provisions

Amid a number of proposed Part D policy changes, the Centers for Medicare & Medicaid Services' recently proposed rule, Modernizing Part D and Medicare Advantage to Lower Drug Prices and Reduce Out-of-Pocket Expenses, CMS-4180-P, features critical reform of Part D pharmacy price concessions, also known as direct and indirect remuneration or DIR fees.

NCPA strongly supports the pharmacy price concession provisions in the proposed rule.

Under the current system, pharmacy benefit managers – the middlemen hired by plan sponsors to administer prescription drug benefits – often claw back fees from pharmacies well after a transaction. Those fees, called direct and indirect remuneration, are often unpredictable and seemingly unconnected to a pharmacy's performance related to adherence and other standards. The fees also disadvantage patients, who are assessed a higher cost-share against their Part D deductible rather than the retroactive, lower adjusted price. The result is to push patients more quickly into the so-called Part D donut hole, at which point the patient is responsible for a considerably larger portion of their prescription drug costs.

The proposal in the rule would require all price concessions from pharmacies to be accounted for in the "negotiated" price. The only price adjustments that could be made retroactively would be additional incentive payments made to the pharmacy by the plan. The proposal will give pharmacy owners greater clarity about their reimbursement under Medicare Part D at the time a medication is dispensed.

For Part D beneficiaries, the proposal will lower the negotiated price of a medication, which will lower patients' out-of-pocket costs at the pharmacy counter for medicines purchased with a co-insurance component. That, in turn, will slow patients' progression toward the Part D donut hole, at which point the patient is responsible for a much higher percentage of prescription drug costs.

This proposal reflected the relentless work of NCPA and its pharmacy partners to bring the problem of DIR fees to the attention of policymakers. Those efforts included a succession of meetings with administration officials, legislators, and key staffers; joint stakeholder letters; and pharmacist grassroots mobilization. In fact, HHS Secretary Alex Azar and CMS Administrator Seema Verma singled out the work of community pharmacy on this issue in a joint blog post about the proposed rule, noting that "Independent pharmacies have raised concerns that back-end deals with health insurance plans are eroding competition and making it harder for them to continue providing medications to beneficiaries."

The DIR language in this proposed rule presents the best opportunity to date to address pharmacy DIR fees and was widely supported during the public comment period. Nearly 3,500 pharmacists and 170 patients voiced submitted comments urging that these DIR provisions be finalized. Additionally, more than 150 pharmacy stakeholder organizations representing diverse interests, unified their voices and submitted a joint letter of support to CMS. Several letters supporting the proposed DIR fixes are also being sent by members of Congress. Finally, more than two dozen patient advocacy organizations supported the proposed DIR fix.

CMS will now review all the public comments that were submitted and a final rule is expected to be released sometime in April.

What CMS' proposed DIR rule does – and doesn't do

NCPA Analysis of Proposed Rule

NCPA Press Release on Proposed Rule

Joint Statement by NCPA, NACDS and NASP

NCPA Hill One Pager on Proposed Rule

Comment Letters

Senate Support Letter

NCPA Comments

Joint NCPA/NACDS/NASP Comments

Joint NCPA/ASCP/SCPC Comments

Pharmacy Stakeholder letter

Grassroots Materials for Pharmacists:

Sample social media and letter to the editor template

Patient Resources

Patient One Pager

Please contact Michael Rule at mrule@ncpanet.org or at (703) 838-2671 with any questions