NCPA Executive Update

NCPA Executive Update delivers insights on legislative, regulatory, policy, and industry developments from NCPA CEO B. Douglas Hoey, Pharmacist, MBA, to NCPA members and pharmacy leaders every Friday.

DIR Shouldn’t Stand for ‘Direct and Indirect Rip Off’ | NCPA Executive Update | June 10, 2016

by NCPA | Jun 10, 2016

June 10, 2016

DIR Shouldn't Stand for 'Direct and Indirect Rip Off'

Dear Colleague,

Doug Hoey

First of all, let me thank the hundreds of NCPA members who have taken a few minutes out of their always busy days to fill out our brief online survey on PBM DIRs and clawbacks.

The survey is intended to put real meat on the bones of the anecdotes we've been hearing, and the more meat the better--particularly examples that involve Medicare Part D. Our advocacy team will share the final results with community pharmacy champions on Capitol Hill and the Centers for Medicare & Medicaid Services with one of the goals being for pharmacies to at least know at point of sale what their reimbursement is—not six months down the road.

Just as a quick reminder, DIR stands for direct and indirect remuneration and was created by Congress when it passed Medicare Part D. Its original purpose was to create a mechanism for PBMs to report manufacturer rebates to CMS so that the government would be able to account for actual drug costs. When pressure on MAC transparency began to increase, PBMs hijacked the original purpose and inserted DIR fees into pharmacy contracts. Each year the PBMs/plan sponsors get a little greedier.

Plan sponsors tell CMS that they need the DIR fees to fund pharmacy performance incentives. NCPA tells CMS that only a small fraction of the fees taken from pharmacies are being used to reward performance that benefits patients.

Here are some of the initial survey findings:

+ 73% of respondents said they received no information on how much and when DIR fees will be assessed.

+ 53% of the respondents said that after the DIR fee is extracted from the pharmacy, their net reimbursement was below their acquisition cost more than 20% of the time.

As if DIR fees weren't enough, some PBMs also levy hidden fees on patients, too. The second part of the NCPA survey focuses on these copay clawbacks on patients.

It is very important for you to provide us with information on patient copay clawbacks and the impact of contractually imposed gag clauses on what the patient pays. A few vivid examples backed up by numbers help community pharmacy advocates illustrate to lawmakers what is happening to your patients and their constituents (i.e., the voters). That is what attracted the attention of award-winning TV journalist Lee Zurik of Fox8 in New Orleans that resulted in his powerful series of in-depth reports and brought promises of action from one of Louisiana's U.S. Senators and the state's insurance commissioner.

I'm sure you have many examples of your own--and I urge you to use the survey to send them in—but here are a few from the initial batch that caught my eye:

+ "Aetna Coventry [Medicare] Advantage plan telling us to charge a $100 copay on generic Ambien, which we could sell to the customer for $15. Also, telling us to charge $100 for generic opioid pain medicine when [the patient] could buy it in cash for $50-$70."

+ "For the month of May in my pharmacy there were 277 instances of clawbacks. In the worst case the patient paid a $40 copay and $27.50 was taken back by the insurance company."

So far pharmacists completing the survey have told us that copay clawbacks on patients are common--87% said this happened at least 10 times in past month—with several health plans figuring prominently. (We'll await the final results to name them.)

You made clear in our annual priorities survey that DIRs are among your top concerns, and attendees at the recently concluded NCPA Pharmacy Summit reiterated that in their meetings in congressional offices. Our pharmacy champions in the House and Senate are asking their colleagues to sign letters urging CMS to instruct PBMs that almost all pharmacy DIRs can and should be assessed in real time. The survey will reinforce those letters.

Doug Hoey