Pharmacy Groups Applaud CMS’ Elimination of Retroactive DIR Fees

Several pharmacy groups, including the American Pharmacists Association, the National Community Pharmacists Association and the National Association of Chain Drug Stores, commended CMS for issuing a final rule eliminating Part D plans’ and PBMs’ use of retroactive direct and indirect remuneration, or DIR fees beginning on Jan. 1, 2024 (the contract year 2024).

The new rule — Medicare Program; Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs — was finalized by the Centers for Medicare & Medicaid Services. 

APhA shared its appreciation for CMS’ ongoing efforts to end the uncertainty and lack of drug cost transparency at the pharmacy caused by retroactive DIR fees. In addition, based on the feedback of its members, the organization said that CMS’ final rule also eliminated a proposed loophole that would have left it up to the Part D plans and PBMs to determine how much, if any, of the pharmacy price concessions they would pass through to patients at the point-of-sale during the coverage gap in the Medicare Part D program. 

“We thank our members who stepped up and sent comments to CMS to ensure that their patients’ voices were heard!” said Scott Knoer, APhA executive vice president and CEO. “Eliminating the retroactive use of DIR fees is a step in the right direction, but it’s only the tip of the iceberg to end PBMs’ business practices that are harmful to patients and hurt our nation’s pharmacies.”

Retroactive DIR fees are price concessions not reflected at the point-of-sale for pharmacies participating in Medicare Part D networks. The retroactive fees are assessed weeks or even months after Part D beneficiaries’ prescriptions are filled, resulting in pharmacies realizing only long after the prescription was filled that they did not recoup their costs. Between 2010 and 2020, CMS reported that retroactive DIR fees increased by a staggering 107,400%. These fees also result in patients paying more at the pharmacy counter for their prescription drugs.

The final rule merely moves the fees to the point-of-sale negotiated price. It does not eliminate these fees, APhA said.

“APhA will continue to work to eliminate these practices in the effort to help advance health equity in rural and underserved communities and keep pharmacy doors open in these communities, where the local pharmacy may be the only healthcare provider for miles,” Knoer said. 

“This decision benefits patients who often have to make difficult choices about paying for their medications,” said Theresa Tolle, APhA president. “This often leads to poorer health outcomes and increased healthcare costs. Although it provides some predictability for pharmacies, more action is needed to address PBMs’ anticompetitive practices that are impacting the viability of neighborhood pharmacies.”

READ MORE