National LTC Pharmacy Group to CMS: Abolish DIR Fees – “A Windfall Profit” for Prescription Drug Plans (PDPs) and Pharmacy Benefit Managers (PBMs)

DATE: January 28, 2019

Washington, DC – In submitting detailed comments regarding the Centers for Medicare and Medicaid Services’ (CMS) proposed rule Modernizing Medicare Part D and Medicare Advantage to lower drug prices and reduce consumers’ out-of-pocket expenses, the Senior Care Pharmacy Coalition (SCPC) says the most certain method of reducing consumer drug costs simply is to eliminate direct and indirect remuneration (DIR) fees altogether.   The SCPC President and CEO praised CMS for its diligence in pursuing reduced beneficiary costs — including co-pays — but says the group has significant concerns about the current proposal.

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 POS – SCPC President and CEO Alan G. Rosenbloom says, “DIR fees simply represent windfall profits to Part D Prescription Drug Plan (PBM) or its negotiating agent, the Pharmacy Benefits Manager (PBMs.  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.”  Rosenbloom noted that DIR fees impact pharmacy markets differently, which drives different responses within the sector, but explained that “LTC pharmacies believe eliminating DIR fees both lowers overall consumer costs (co-pays and Part D premiums) and more directly corrects the oligopolistic market distortions unfettered growth in DIR fees has caused than the agency’s proposal.  CMS noted that use of DIR fees grew 45,000% from 2010 to 2017.

Stated Rosenbloom: “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.” SCPC is the only Washington-based organization exclusively representing the interests of LTC pharmacies, with 80% of all independent LTC pharmacies among its members. SCPC members serve approximately 825,000 residents daily in skilling nursing and assisted living facilities (SNFs/ALFs) nationwide.

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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 750,000 patients daily in skilled nursing and assisted living facilities across the country. Visit seniorcarepharmacies.org to learn more.