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WASHINGTON — Advocates of direct and indirect remuneration (DIR) fee reform are intensifying pressure on the White House to reverse the May rule that left the existing drug pricing system intact.
In a letter sent early last month to President Trump, organizations representing a broad range of pharmacies and pharmacists said action by the administration, Congress or both is needed to provide relief from DIR fees that inflate drug costs paid by patients and the government, and that often force pharmacies to fill Medicare prescriptions below cost.
Later in June, 105 members of the House of Representatives — nearly a quarter of the body — sent a letter to Trump noting the “missed opportunity” to reduce seniors’ out-of-pocket costs for prescription drugs.
Joining to beseech Trump from the pharmacy community were the National Association of Chain Drug Stores, National Community Pharmacists Association, National Association of Specialty Pharmacy, American Pharmacists Association, Food Marketing Institute and National Grocers Association.
They wrote to voice “disappointment that the final rule Modernizing Part D and Medicare Advantage to Lower Drug Prices and Reduce Out-of-Pocket Expenses did not address onerous fees that have increased 45,000% since 2010, with no savings passed onto beneficiaries.” They said that the number will continue to grow if DIR fees are not reformed.
The abuse of DIR fees is a result of a regulatory loophole, the groups said. Payers claw back reimbursement paid to pharmacies for Medicare prescriptions, often more than half a year after the transaction. Payers claim that these fees are based on quality performance, yet pharmacy organizations say the metrics lack transparency, vary widely and often do not reflect areas under pharmacy’s control.
Members of Congress are working on a bipartisan basis to craft and marshal support for legislation that would accomplish reforms initially proposed, but not ultimately finalized, in the Medicare rule-making process for 2020. These reforms include addressing the gaming of the system through DIR fees, and working toward pharmacy-specific metrics to enhance patient outcomes and appropriately evaluate pharmacy performance.
The pharmacy groups urged, “We request your immediate help to address DIR reform this year in order to eliminate practices that drive up patient and government spending on drugs. We appreciate [Health and Human Services] Secretary [Alex] Azar’s engagement with the pharmacy community on DIR reform, and understand that the administration is willing to support a legislative solution to this critical issue. We stand ready to work with you and your administration to pursue additional opportunities, such as legislation, to move DIR reform forward.”
The groups noted that the Centers for Medicare and Medicaid Services estimated that beneficiaries would save $7.1 billion to $9.2 billion over 10 years in reduced costs at the pharmacy counter, even when factoring in a potential for slightly higher premiums.
They also emphasized the extensive support for DIR fee reform during the Medicare rule’s comment phase, as expressed formally by over 3,500 pharmacists, 155 pharmacy stakeholder organizations, more than two dozen patient advocacy organizations, 29 senators, and 62 members of the House of Representatives. These entities and individuals — and more — are rallying behind bipartisan legislative action and the prospect of any further regulatory action that could be productive, the organizations said.
The letter from legislators, including one-third of the House Energy and Commerce Committee’s majority members, urged the administration to finalize pharmacy DIR reform this year. The bipartisan letter was led by community pharmacy champions Reps. Peter Welch (D., Vt.), Vicente Gonzalez (D., Texas), Buddy Carter (R., Ga.), and Morgan Griffith (R., Va.). Earlier, 28 bipartisan members of the Senate, led by Sens. Shelley Moore Capito (R., W.Va.) and Jon Tester (D., Mont.), sent a similar letter.
The congressional engagement was welcomed by the united voices of diverse pharmacy organizations. Issuing a joint statement were all the signatories of the earlier letter, plus the National Alliance of State Pharmacy Associations and American Society of Consultant Pharmacists.
The groups said: “We appreciate this strong and bipartisan demonstration that DIR fee relief is needed now, to deliver savings to patients and to the Medicare program, and for the viability of pharmacies. It is essential that this powerful statement is translated into action on DIR relief this year, through executive branch action, through inclusion in drug-pricing legislation, or both. Reform is needed to address the gaming of the system through DIR fees, and to work toward pharmacy-specific metrics to enhance patient outcomes and appropriately evaluate pharmacy performance.”
