DIR Reduces Part D Costs and Premiums

(Washington, D.C.) — The Pharmaceutical Care Management Association (PCMA) today released a new study, “Value of Direct and Indirect Remuneration (DIR): Impact on Medicare Part D Prescription Drug Plan (PDP) Program Stakeholders,” showing that the price concessions that pharmacy benefit managers (PBMs) negotiate with drug manufacturers and drugstores and report to the Centers for Medicare & Medicaid Services as DIR are generating significant savings for the federal government and are projected to save enrollees in standalone Part D plans $48.7 billion on their premiums over the next 10 years.

“Without DIR, Part D premiums and program costs would be much higher,” said PCMA President and CEO Mark Merritt.

Click here for the study.

Major findings from the Milliman study:

Total Value of DIR:

  • DIR saved the standalone Part D program and its beneficiaries approximately $87.8 billion from the inception of the program through 2016.
  • From 2017 through 2026, DIR is projected to save $308.2 billion.

Federal Savings from DIR:

  • DIR will reduce the federal government’s costs for Part D by a projected $17.2 billion in 2017, a 26.6% savings compared to costs without any price concessions similar to DIR.
  • From 2006 to 2016, DIR saved the federal government an estimated $75.4 billion.
  • From 2017 to 2026, DIR will save the federal government a projected $259.6 billion.

Premium Savings from DIR:

  • Since the inception of the Part D program through 2016, DIR saved Part D beneficiaries an estimated 21.5% on their premiums, a $12.4 billion savings.
  • From 2017 through 2026, that savings is projected to increase to an average 33.2% on premiums, or $48.7 billion.

The study assumes Medicare Part D stakeholders do not change their behavior in response to changes in DIR levels.