WASHINGTON, D.C. – U.S. Senators Shelley Moore Capito (R-W.Va.), Jon Tester (D-Mont.), and a bipartisan group of their colleagues recently introduced legislation to protect consumers and small businesses by holding Pharmacy Benefit Managers (PBMs) accountable for retroactively assessing fees on pharmacies.

The Pharmacy DIR Reform to Reduce Senior Drug Costs Act would ensure that all pharmacy price concessions are assessed at the point of sale and eliminate the retroactive nature of direct and indirect remuneration (DIR) clawback fees imposed by PBMs. The Centers for Medicare and Medicaid Services (CMS) estimates this change would save Medicare beneficiaries an estimated $7.1 to $9.2 billion in reduced cost sharing.

“Pharmacists, including those in our small towns and rural areas, play a vital role in keeping our communities healthy – something that is especially true over this past year,” Senator Capito said. “Our legislation will help ensure pharmacies remain open and our Medicare patients will continue to have access to the medications and information they need from those they trust.”

“Rural pharmacies are a lifeline to Montana communities, and are often the only place for miles where folks can get the prescriptions they need to stay healthy and safe,” Senator Tester said. “But I’ve heard from pharmacists across our state who are being driven toward bankruptcy by hidden fees charged by corporate middle men. This legislation will mandate transparency and accountability so that we can protect pharmacies and patients and ensure that folks in rural America can continue to get the prescriptions they need.”

BACKGROUND:

Under Medicare Part D, Medicare makes partially capitated payments to private insurers, also known as Part D sponsors, for delivering prescription drug benefits to Medicare beneficiaries. Often, the Part D sponsor or its PBM receives additional compensation after the point-of-sale that serves to change the final cost of the drug for the payer. These are called DIR fees.

In recent years, PBMs have increasingly returned to pharmacies days or even weeks after the point-of-sale to demand more in DIR fees. From 2010 to 2019, CMS documented a 91,500 percent increase in DIR fees paid by pharmacies.

The Pharmacy DIR Reform to Reduce Senior Drug Costs Act would increase transparency and hold PBMs accountable for retroactively assessing fees on pharmacies by:

  • Redefining “negotiated price” under statute to include all pharmacy price concessions at the point-of-sale so that a senior’s cost-sharing will reflect all possible discounts.

  • Eliminating the retroactive nature of DIR clawback fees.

  • Improving transparency in price concessions and fees by requiring prescription drug plans and Medicare Advantage drug plans to report any pharmacy price concession or incentive payment they apply after the point-of-sale to a pharmacy on at least an annual basis.

  • Establishing a new pharmacy performance evaluation system to ensure that the measures a prescription drug plan or Medicare Advantage drug plan uses to assess pharmacy performance are fair, reliable, consistent, and transparent.

 

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