National LTC Pharmacy Group: DIR Fees Should be Eliminated, Not “Reformed”

DATE: March 7, 2019

Washington, DC – In thanking Senate Special Committee on Aging Chairman Susan Collins (R-ME) and Ranking Member Bob Casey (D-PA) for holding its two-day hearing devoted to “untangling the complex web of prescription drug prices,” the Senior Care Pharmacy Coalition (SCPC) reiterated its contention that the best means to boost consumer transparency and reduce consumer drug costs is to simply eliminate direct and indirect remuneration (DIR) fees altogether, not “reform” them in the manner sought by the Centers for Medicare & Medicaid Services (CMS).

“Plain and simple, DIR fees are a windfall profit for prescription drug plans (PDPs) and pharmacy benefit managers (PBMs), and should be abolished – not reformed,” said Alan G. Rosenbloom, President and CEO of SCPC, the only Washington-based organization exclusively representing the interests of LTC pharmacies and the elderly patients they serve in skilled nursing and assisted living facilities (SNFs/ALF’s) nationwide. “CMS itself has noted that use of DIR fees grew 45,000 percent from 2010 to 2017 – a statistic that speaks for itself.”

In submitting detailed comments regarding the Centers for Medicare & Medicaid Services’ (CMS) proposed rule Modernizing Medicare Part D and Medicare Advantage to lower drug prices and reduce consumers’ out-of-pocket expenses, SCPC praised CMS for its diligence in pursuing reduced beneficiary costs — including co-pays — but explains it has significant concerns about the current proposal.

SCPC’s comments also spotlight the fact that in January 2017, CMS released a short but important analysis demonstrating that PBMs retain drug rebates and DIR fees as profits, rather than passing those cost-saving measures on to beneficiaries.”

In differing from other pharmacy sector groups — which offer support for the CMS proposal to include DIR fees when calculating beneficiary co-pays under Part D at the point of sale – Rosenbloom says, “DIR fees are not a legitimate correction to reflect the gross-to-net spread with respect to Part D payments to PDPs, or PDP/PBM payments to LTC pharmacies.”

The SCPC President and CEO observed that DIR fees impact pharmacy markets differently, which drives different responses within the sector. “The unique nature of LTC pharmacies, the elderly patients they serve — and the fact they provide clinical and supportive services retail and other pharmacy groups do not — requires evaluating the regulatory landscape through a different lens. Throughout 2019, we will continue to aggressively advance our position on DIR fees in this regard.”

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The Senior Care Pharmacy Coalition (SCPC) is the only national organization exclusively representing the interests of LTC pharmacies. Its members operate in all 50 states and serve 825,000 patients daily in skilled nursing and assisted living facilities across the country. Visit seniorcarepharmacies.org to learn more.