Resources Page: Pharmacy DIR Fees and NCPA Advocacy Efforts

Earlier this year, the administration failed to adopt a proposed rule containing a number of Part D policy changes, including critical reform of Part D pharmacy price concessions, also known as direct and indirect remuneration (or DIR fees). While the administration may have failed to act, fixing pharmacy DIR fees remains a top NCPA priority.

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.

While the regulatory process is stalled, NCPA continues to work with leaders in the Senate and House on legislation to reform the system. The Senate Finance Committee is currently working on a package of bills that we are trying hard to influence. Specifically, we are seeking a requirement that all price concessions from pharmacies to be accounted for in the "negotiated" price at the point of sale. The only price adjustments that could be made retroactively would be additional incentive payments made to the pharmacy by the plan/PBM. This would give pharmacy owners greater clarity about their reimbursement under Medicare Part D at the time a medication is dispensed. NCPA is also advocating for the adoption of standardized pharmacy specific quality measures that the pharmacy can truly influence.

For Part D beneficiaries, included any DIR fees at point of sale would 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, would 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.

Fixing DIR has been our top priority for several years, and we are grateful to our members and partners for their efforts to influence policymakers. Those efforts have 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 Senate Finance package now presents the best opportunity this year to address pharmacy DIR fees. We continue to urge the administration to reconsider its decision and approve the rule. We are also urging members of the Senate to joint that effort. In the meantime, we are urging members of the Senate Finance Committee to include our reforms in a package of bills that could become law in 2019.

Phair Pricing Act – S. 640 / H.R. 1034 One Pager

Senate HELP Committee request for comments on the Lower Health Care Costs Act of 2019

NCPA comments to Ways and Means and Energy and Commerce Committees

DIR Activity Timeline

Comment Letters

Pharmacy Stakeholder letter to Senate Finance Committee

Senate Letter to President Trump

House Letter to President Trump

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

Phair Act Grassroots Message

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