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.

Putting a Spotlight on DIRs, Clawbacks | NCPA Executive Update | July 1, 2016

by NCPA | Jul 01, 2016

Dear Colleague,

Doug Hoey

The final results have been tallied from our recent member survey on DIRs and copay clawbacks, and the takeaway isn't surprising—prescription drug costs are being skewed by cryptic fees imposed by PBMs on pharmacies and patients.

Many thanks to the 640 pharmacists who documented the scope and effect of these two relatively recent—and disturbing—trends. The survey found that most independent community pharmacists consistently encounter these misleading and confusing PBM-levied fees that negatively impact both pharmacies and patients and distort medication costs and reimbursement rates. PBMs are inserting costs into the health care system on virtually everyone in order to fuel their profits and reward shareholders.

While we were not surprised by the findings, it was important to quantify the impact so the magnitude of the situation can be explained.

DIR fees can total thousands of dollars each month, according to the survey, and 53% of respondents said they are assessed quarterly. Many complained that this lag time makes it difficult to operate a small business and impossible to determine at the time of dispensing whether the net reimbursement will cover their costs. Members reported that the Aetna and CVS Caremark drug plans were the most egregious in this area. We have posted online comments from members that further illustrate the problem and also published an online video.

Government officials and health plan sponsors must insist on greater transparency and oversight of these profit-driven PBM practices to ensure that plan costs and premiums go to their intended purpose: taking care of patients. To that end, NCPA facilitated a bipartisan letter to the Centers for Medicare & Medicaid Services signed by 16 Senators and 30 Representatives that urged implementation of the agency's proposed "negotiated drug price" guidance. It would require Part D plans to consistently report DIR (direct and indirect remuneration) fees to bring greater transparency into the program; improve accuracy of the Medicare Plan Finder utilized by patients to evaluate drug plans; and hopefully give pharmacists more clarity into their true reimbursement rates.

The Senate letter was led by Sens. Shelley Moore Capito (R-W.Va.), Jon Tester (D-Mont.), Charles Grassley (R-Iowa), and Sherrod Brown (D-Ohio). The House letter was spearheaded by Reps. Austin Scott (R-Ga.), David Loebsack (D-Iowa), Earl "Buddy" Carter (R-Ga.), and Peter Welch (D-Vt.).

NCPA also facilitated a letter to CMS by eight patient advocacy groups concerned about the problems DIRs cause for Medicare beneficiaries on Plan Finder by distorting the true costs of various drugs. The signers included the Medicare Rights Center, the National Committee to Preserve Social Security and Medicare, and the National Council on Aging. NCPA will continue to work with such organizations on issues of common interest to build a broader coalition to advance pro-patient, pro-pharmacist solutions.

Furthermore, NCPA last week sent a grassroots alert urging members to tell their legislators who have not yet done so to voice support for CMS' proposed DIR guidance. To date, there have been 1,306 emails sent to 251 House and 88 Senate offices by NCPA members. Please contact your member of Congress on this critical issue.

The member survey also disputed claims by PBMs that DIRs fees are actually "pay-for-performance" incentives to reward quality care. Although PBMs may try to characterize these fees as "incentives," the fact remains that these fees are extracted from all pharmacies—the caveat being that high-performing pharmacies may not get as much money withheld. Thanks a lot.

But it gets worse. Survey respondents said that PBMs were not transparent about their DIR fee criteria and assessed DIR fees on pharmacies with the highest quality ratings.

The survey also asked about patient copay clawbacks, featured on the New Orleans TV channel 8 Fox affiliate. While not the same as pharmacy clawbacks, copay clawbacks further illustrate that pharmacy is not alone in saying enough's enough. Pharmacies and patients deserve a transparent model without mysterious fees.

Doug Hoey