WASHINGTON, D. C. -- The Centers for Medicare and Medicaid Services has told U.S. Sen. Sherrod Brown that it is considering a crackdown on a controversial pharmacy benefit management practice that Ohio pharmacies say is putting the squeeze on them and driving up drug costs for Medicare Part D beneficiaries.
Brown, an Ohio Democrat, joined legislators from both political parties last year in asking CMS to address the problem of direct and indirect remuneration (DIR) fees that pharmacy benefit management companies charge pharmacists.
“They serve virtually no purpose other than to raise prices and enrich the middlemen,” Brown told reporters on Wednesday, saying the fees contributed to the closure of 250 independent pharmacies in Ohio over the past two years.
Ohio Pharmacists Association Director Ernest Boyd says the fee the companies charge to average small pharmacies now totals around $80,000 a year, enough to wipe out all their profits. Boyd said they wreck pharmacists’ balance sheets because they’re unpredictable and are often charged to pharmacists months after they’ve dispensed the drugs for which the benefits management company is assessing the fee.
He said PBMs, which control drug contracts between pharmacies and manufacturers, use the fees to boost profitability. According to CMS statistics, DIR fees to pharmacists escalated by 91,500 percent between 2010 and 2019.
Last month, CMS Director Chiquita Brooks-LaSure sent Brown a letter that said her agency is studying the role the fees play in the prescription drug marketplace.
“CMS agrees that the significant growth in DIR amounts is troubling and is planning to use our administrative authority to issue proposed rulemaking addressing price concessions and DIR,” her letter said.
A statement from the Pharmaceutical Care Management Association said the organization looks forward to reviewing the CMS proposal.
The PBM trade group’s statement called the DIR payments “an important tool for keeping independent drugstores accountable for doing their part to improve beneficiary health outcomes, increase access, and lower prescription drug costs.” It said a 2018 CMS analysis indicated that eliminating the payments would boost Part D premiums by $5.7 billion and taxpayer costs by $16.6 billion over 10 years.
“Independent drugstores want to go back to a fee-for-service model where reimbursement is exempt from quality metrics,” said the statement from PCMA Assistant Vice President Greg Lopes. “Barring pharmacy DIR in Medicare Part D would increase premiums for seniors and raise costs for taxpayers, while decreasing the quality of pharmacy care for beneficiaries.”
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