WASHINGTON, D.C. — U.S. Senator Shelley Moore Capito (R-W.Va.) joined Senators Jon Tester (D-Mont.), Sherrod Brown (D-Ohio), and James Lankford (R-Okla.) Oct. 14 in sending a letter urging the Centers for Medicare and Medicaid Services (CMS) to either work with Congress to eliminate direct and indirect remuneration (DIR) fees to help lower prescription drug prices for Medicare Part D beneficiaries or take administrative action to address the problem.
“We write today to discuss our serious concerns about the impact direct and indirect remuneration (DIR) fees are having on the cost of drugs for Medicare Part D beneficiaries and pharmacy bottom lines,” the senators wrote. “We urge you to work with Congress to require pharmacy price concessions, payments, and fees be included at the point-of-sale under Part D of the Medicare program. It is time we stand up for seniors and address this broken system that sees people paying far too much for prescription drugs.”
They concluded, “We also note that Congress already provided the Centers for Medicare and Medicaid Services with sufficient authority to make the necessary changes administratively. With multiple avenues available to fix this problem, it is imperative that we work together to reform DIR fees, reduce drug costs, and protect pharmacies.”
Under Medicare Part D, Medicare makes payments to private Part D insurers for delivering prescription drug benefits to Medicare beneficiaries. Often, the Part D insurer or its pharmacy benefit manager (PBM) receives additional payments after the point-of-sale that changes the final cost of the drug. These are called DIR fees.
In recent years, PBMs have increasingly returned to pharmacies days or even months after the final 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 senators recently introduced their bipartisan Pharmacy DIR Reform to Reduce Senior Drug Costs Act, which would combat rising drug prices for seniors and curb the predatory practices of PBMs by holding them accountable for retroactively assessing fees on pharmacies. By ensuring that all pharmacy price concessions are assessed at the point of sale and eliminating clawback fees imposed by PBMs, it is estimated that the legislation would reduce seniors’ Medicare Part D out-of-Pocket costs by $7.1-$9.2 billion.