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 Fees, Payment Models, and the Way Forward | NCPA Executive Update | February 17, 2017

by NCPA | Feb 17, 2017

Dear Colleague,

Doug Hoey

As I write this I am at NCPA's Multiple Locations Conference. Not surprisingly, DIR fees are a hot topic of conversation, and so is buzz about breaking out of the consistent downward prescription payment trend.

DIR Legislation Reintroduced

Right before I left D.C., I got the good news that DIR legislation that would ban retroactive pharmacy payment clawbacks had been reintroduced in the House and Senate. The "Improving Transparency and Accuracy in Medicare Part D Drug Spending Act" H.R. 1038 and S. 413 were introduced by a notable group of influential legislators. (You'll find their names listed in the documents linked above. If there's a cosponsor from your state, please send them a big thank you. If your lawmakers are not listed, reach out and urge them to support the legislation.)

A lot has happened with DIR fees since legislation was introduced in the last Congress. Perhaps most notably, CMS released its analysis of DIR fees in January, and it showed exactly what NCPA has been saying for years:

  • DIR fees increase costs.

  • DIR fees push seniors into the donut hole faster.

  • DIR fees push seniors into catastrophic coverage (shouldered by government taxpayer dollars) faster.

The CMS analysis said that DIR fees might lower patient premiums, but we believe that the increased out-of-pocket costs for patients and copay uncertainty for seniors exceed any possible savings. The issue is so significant one Wall Street analyst has downgraded CVSHealth from buy to neutral, citing exposure risk to DIR fees.

Add to that NCPA's consistent refrain that PBMs contribute to the rising costs of drugs and community pharmacists can help lower overall health care costs and you can see why the profile of DIR fees and other PBM tools that bloat prescription drug costs has been raised significantly. There is a chance to change how pharmacy DIR fees are being (mis)used. Share this Pharmacy DIR Fee Fact Sheet and our brand-new DIR infographic with your members of Congress.

On the ground at MLC...

The buzz at the Multiple Locations Conference here in San Diego is generated by pharmacy owners who know that counting on the same payment model today that they had 10 years ago is dangerous. The community pharmacy environment has changed radically.

There are more prescriptions to be filled, but almost 90% of them are for generic medications. High-cost specialty drugs account now account for more than one-third of total prescription drug costs and the proportion is rising. This year as many as five new biosimilar specialty drugs may be approved, which will further change the rebate pricing game that has shifted more costs to consumers and payers—and more revenue to middlemen.

Yesterday morning's program was about how some pharmacy owners are innovating the current payment system—in many cases by sharpening and better-packaging services they are currently offering. Joe Moose, a pharmacy owner from North Carolina, was one of the speakers and had these quotable quotes:

  • "If all we (community pharmacists) do today is the same thing we did yesterday but just cheaper and faster, it's a race to the payment bottom."

  • "In North Carolina, the average complex patient sees their primary care provider an average of 3.5 times a year. The same patient sees their community pharmacist 35 times a year."

  • "We can't legislate our way to success. We have to innovate our way to success."

There are a growing number of opportunities for pharmacies to aggregate their innovative services. While we may not be able to legislate our way to success, it's vital that every community pharmacy owner support legislation, regulation, and, when necessary, litigation to insert some balance into the one-sided business relationship between pharmacies and PBMs, while simultaneously innovating their practice. The pharmacy owners at the Multiple Locations Conference are getting a big dose of that.

Doug Hoey

P.S. Join our Members Forum for a preview of NCPA's strategy on DIR fees and others topics you said were important in our annual member survey.

Date: Feb. 22, 2 p.m. ET

Speakers: NCPA CEO Doug Hoey, Pharmacist, MBA, & NCPA Advocacy Center staff
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