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.

Don't Sit Idly While PBMs Impose Outlandish DIRs | NCPA Executive Update | July 22, 2016

by NCPA | Jul 22, 2016

Dear Colleague,

Doug Hoey

It seems like déjà vu as we are once again hearing stories of onerous direct and indirect remuneration fees (DIRs) assessed by Medicare drug plans ostensibly to "reward" pharmacy performance. This is the latest example of a "penalty for performance" incentive rather than a payment for performance program that aligns incentives of the patient, plan, payer, and pharmacy (see June 17 Executive Update, "Penalty for Performance?"). The latest reports indicate that some independent pharmacies are facing DIRs as high as $30,000 from CVS Caremark—for just one quarter!

To add to the problem, members reported in NCPA's recent survey on DIR fees that CVS Caremark is one of the slowest in terms of lag time in assessing DIRs. This unpredictability and slowing of cash flow is unsustainable for any small business pharmacy.

DIRs are a top priority for NCPA. Membership ranked this as a pivotal issue for 2016, and NCPA staff has been working tirelessly on ways to address these issues. For example, we continue to remain engaged with the Centers for Medicare & Medicaid Services (CMS) to encourage finalization of guidance that would require plans to approximate most of these fees at the point of sale which should also help to address the lag time.

As I mentioned a few weeks ago (see July 1 Executive Update, "Putting a Spotlight on DIRs, Clawbacks"), NCPA has also worked with members of the House and Senate and outside consumer organizations to demonstrate support for this proposal. In addition to pursuing finalization of the CMS guidance, an internal NCPA task force consisting of staff members from various departments is in place to continue exploring alternative resolutions, including potential legislation.

While NCPA has been amplifying your voice at a national level, it's vital that legislators hear from you, their constituents, on how DIRs affect local small business pharmacies and their communities. Now is a perfect time for you to engage with your elected officials face-to-face. Members of Congress have left Washington for their annual summer recess, and many are back in the district until Labor Day to meet with constituents.

That gives you six weeks to tell your elected representatives how they can help small business in their state when they go back to D.C. This provides a great opportunity for you to invite them to visit your pharmacy or to request a meeting in their district office to discuss DIRs and other critical issues.

NCPA has tips for scheduling meetings available here. You can also contact Michael Rule at for assistance or to inform NCPA once a meeting with your legislator is scheduled. Additionally some lawmakers may host town hall meetings, which could provide an opportunity for you to ask a question or make a statement.

In any interaction with your legislator, be sure to localize the issue and let them know, with specific examples, what DIRs are costing you and your community. Are they making it difficult to maintain your employment levels? Are they making it increasingly difficult to serve your patients? Are you unable to sustain past levels of charitable giving?

These are details your legislator needs to understand. They also need to know what action they can take. In this case, they should contact CMS and urge the agency to finalize the proposed DIR guidance.

Delivering this message in person has several benefits. It allows you to explain a complex issue in detail, and it helps establish you as a resource for the legislator. Over time, it can lead to that legislator becoming a champion of independent pharmacy issues.

I highlighted one such example in the June 3 Executive Update (What About Bob?) where Ohio pharmacy owner and NCPA past president Bob Blake had formed a relationship over the years with former Representative and now Senator Sherrod Brown. I'd like to note another example: That of George Garmer owner of Halethorpe Pharmacy in Maryland, and his efforts with Rep. John Sarbanes. George has put in great effort over the years to cultivate this relationship and as a result, Congressman Sarbanes has supported most of NCPA's priority bills. He even spoke at our rally in conjunction with the 2014 Legislative Conference where he pointed out George from the podium and praised his efforts.

These are just two of the many examples of a face-to-face interaction leading to a legislator becoming a long-term supporter of independent pharmacy. But they all started the same way—with an independent pharmacist contacting their legislator. Let egregious DIRs by PBMs be the catalyst for you to contact yours.

Note: If you are unable to personally meet with your members of Congress, NCPA has created a recess toolkit of sample materials you can use to promote DIR and MAC transparency. You can also visit the NCPA Action Center to send emails to your legislators in support of key legislation.

Doug Hoey

P.S. This past Monday, NCPA released its second video profiling the value of independent pharmacies to local communities and illustrates that it matters what pharmacy consumers choose entitled, "Theresa Tolle—Independent Pharmacist and Backbone of Her Community."