SCPC Backs Bipartisan Senate, House Bills to Eliminate Retroactive PBM Middlemen Fees on Patients, LTC Pharmacies, Medicare Program

DATE: February 22, 2017

Washington, DC — The Senior Care Pharmacy Coalition (SCPC) today backed legislation introduced in the U.S. Senate and House of Representatives that will curtail the ability of drug industry middlemen — Pharmacy Benefit Managers (PBMs) — from extracting retroactive direct and indirect remuneration (DIR) fees in transactions with patients, long term care (LTC) pharmacies and the Medicare program.

S. 413, introduced by Sens. Shelley Moore Capito (R-WV) and Jon Tester (D-MT), and House companion bill, H.R. 1038, introduced by Reps. Morgan Griffith (R-VA) and Peter Welch (D-VT), specifically prohibits pharmacy DIR fees from being applied after the point of sale for prescription medications dispensed to Medicare patients. Alan G. Rosenbloom, President of SCPC, says passage of the bills into law will begin to address DIR fee abuses — and other unfair practices such as “switching fees” — that negatively affect patients, LTCPs and the Medicare program itself.

S. 413 sponsors are Sens. John Boozman (R-AR), Tom Cotton (R-AR), Charles Grassley (R-IA), Heidi Heitkamp (D-ND), James Lankford (R-OK) and Roger Wicker (R-MS).

H.R. 1038 sponsors are Reps. Bruce Babin (R-TX), Lou Barletta (R-PA), Rod Blum (R-IA), Buddy Carter (R-GA), Doug Collins (R-GA), Rick Crawford (R-AR), Lloyd Doggett (D-TX), Drew Ferguson (R-GA), Bob Goodlatte (R-VA), Gregg Harper (R-MS), Walter Jones (R-NC), Thomas Massie (R-KY), Cathy McMorris Rodgers (R-WA), Martha Roby (R-AL), Phil Roe (R-TN) and Pete Sessions (R-TX).

“We strongly support the bipartisan, bicameral effort to crack down on PBMs’ ability to reach into the pockets of elderly patients and LTC pharmacies weeks and even months following a prescription drug transaction,” Rosenbloom said. “We will be working in the coming weeks with the sponsors and cosponsors of both bills to explain in more detail how PBM middlemen wrongly siphon resources from patients, providers and the Medicare program itself.”

Rosenbloom noted the bill introductions follow a January 2017 Centers for Medicare & Medicaid Services (CMS) report finding that drug companies and pharmacies are paying larger rebates to PBMs and insurers, but that these PBMs are keeping the money rather than translating it into lower costs for government health care programs or beneficiaries.

CMS data show that since 2010, the growth in rebates or concessions paid by drug companies or pharmacies to PBMs or managed care plans (in addition to the lump sum payment plans received from Medicare) after the point of sale (DIR) has far outpaced the growth in Part D drug costs. The DIR that plans report to CMS increased from $31 billion in 2012, to $50 billion in 2015.

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The SCPC is the national association for independent LTC pharmacies. Our member pharmacies provide care and services to patients in LTC facilities in across the country occupying approximately 675,000 beds across the country.  Visit us at www.seniorcarepharmacies.org to learn more.