SCPC Praises Sen. Sherrod Brown for Raising Key LTC Pharmacy Concerns Regarding Controversial PBM Pricing Practices

DATE: March 2, 2017

CMS Administrator Nominee Seema Verma Queried by Ohio Senator About PBMs’ Retroactive DIR Fees

Washington, DC — In conjunction with questions directed to Centers for Medicare & Medicaid Services (CMS) Administrator-nominee Seema Verma from members of the Senate Finance Committee, the Senior Care Pharmacy Coalition (SCPC) today praised Sen. Sherrod Brown (D-OH) for raising key issues of concern to the nation’s long term care (LTC) pharmacy sector. Specifically, SCPC President and CEO Alan G. Rosenbloom thanked the Ohio Senator for asking Verma about so-called “Direct and Indirect Remuneration (DIR) fees” levied retroactively on LTC pharmacies — fees the SCPC believes are both abusive and contribute to pharmaceutical pricing volatility.

Said Rosenbloom: “Senator Brown has raised some excellent, pointed questions about the many controversial and abusive PBM pricing practices that are in no way beneficial to consumers, taxpayers or our broader healthcare system — and we thank him for doing so.”

The following is an excerpt from the Senate Finance Committee Q and A transcript:

Sen. Brown Question: In your hearing, you mentioned that Pharmacy Benefit Managers (PBMs) are negotiating prices for Part D, and you’re glad that they do. I think that more can be done to negotiate lower drug prices for our seniors, and there is a lack of transparency with the status quo. This lack of transparency and limited capacity to negotiate results in higher costs for consumers and can result in significant challenges for small community pharmacies and long-term care pharmacies. These pharmacies are facing increased uncertainty because of Direct and Indirect Remuneration (DIR) fees imposed by PBMs.

CMS has recognized some of these issues, and in January released a fact sheet showing that the use of DIR fees by Part D sponsors has been “growing significantly in recent years” and has led to an increase in beneficiary cost-sharing, an increase in subsidy payments made by Medicare, and an overall decrease in plan liability for total drug costs.

What role do you believe retroactive DIR fees have on exacerbating closures and consolidation across the delivery system?

If confirmed, what specific steps would you take to improve transparency between plans and pharmacies in the use of DIR fees in the Medicare program?

Would you make it a priority to re-visit the September 2014 proposed guidance (Proposed Guidance on Direct and Indirect Remuneration and Pharmacy Price Concessions) to standardize the timing of how these fees are reported, that has not yet been finalized?

Verma: If confirmed, I will welcome the opportunity to work with Congress and all stakeholders, including small community pharmacies and long-term care pharmacies, to preserve seniors’ access to drugs. Additionally, I look forward to working with you to consider how to resolve this pending guidance issue. I would be happy to discuss the September 2014 Proposed Guidance on Direct and Indirect Remuneration and Pharmacy Price Concessions and other related issues with you.

Rosenbloom noted Politico recently reported Verma told the Senate Finance Committee that “Competition is key to holding down the cost to pharmaceuticals… We need to do everything we can do to make drugs more affordable to seniors… I think there are many ways to achieve that goal.” (Source: Politico Pro 2/16/07). 

The SCPC President and CEO said Congress is increasingly skeptical about secretive and opaque PBM pricing protocols which PBMs resist disclosing to CMS, and pointed out Senators Shelley Moore Capito (R-WV) and John Tester (D-MT) along with U.S. Reps. Morgan Griffith (R-VA) and Peter Welch (D-VT) have introduced Senate and House bills, S. 413 and H.R. 1063 respectively, to eliminate retroactive fees PBMs impose on patients, a variety of pharmacy groups, and the Medicare program itself. Significantly, Senator Charles Grassley (R-IA) a member of the Finance Committee and Chairman of the Judiciary Committee, is a co-sponsor of the Senate bill.

“We appreciate Ms. Verma specifically telling Sen. Brown she welcomes the opportunity to work with LTC pharmacies on these crucial policy matters,” Rosenbloom said. “If Ms. Verma is confirmed by the U.S. Senate, we look forward to working with her and CMS staff to ensure we do indeed make drugs more affordable to seniors through more competition and more pharmaceutical pricing transparency.”

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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.