NACDS weighs in on DIR fee reform in comments to CMS

The National Association of Chain Drug Stores has formally weighed in on what needs to change about direct and indirect remuneration, or DIR, fees. The organization on Friday said it submitted comments based on insight from its members to the Centers for Medicare and Medicaid services in response to the agency's proposed reform to the fees as part of an effort to reduce out-of-pocket costs for patients.

The comments responded to CMS’ proposed rule, “Modernizing Part D and Medicare Advantage to Lower Drug Prices and Reduce Out-of-Pocket Expenses,” which was released in November 2018.

“The proposed changes are consistent with several of the Administration’s priorities, including the goal to reduce prescription drug costs for patients; improve the Medicare program; and use ‘[Department of Health and Human Services] programs to build a value-driven healthcare system,’” NACDS wrote in its comments. “We therefore strongly urge CMS to use its current authority to further update the Part D Program by implementing these much-needed reforms in the final rule.”

NACDS’ comments explain that pharmacy DIR fees are based on “a regulatory loophole that plans have exploited to increase beneficiary drug costs,” and that “CMS should close that loophole completely.” DIR fees increasingly are being misused by payers to retroactively and severely claw back reimbursement to pharmacies for the prescription drugs that they provide to Medicare beneficiaries. For example, payers impose penalties for pharmacies’ alleged failure to achieve certain benchmarks — many of which are vague, undefined, inconsistent, unachievable or outside of the control of pharmacies.

“NACDS members’ experiences confirm that the abuses and harms of pharmacy DIR fees are genuine. And the situation is rapidly growing worse, as abusive pharmacy DIR fees continue to grow exponentially. Pharmacies are calling on CMS to eliminate these and other harms now, by implementing reforms to eliminate pharmacy DIR fees,” according to NACDS.

Interpretations of specific terms that are used in the Medicare program related to pharmacy reimbursement and drug pricing have led to these clawbacks, and ultimately to higher out-of-pocket drug costs for patients and increased costs for the government, NACDS said.

NACDS also noted the importance of establishing appropriate quality measures, saying, “Vital to the success of these reforms will be the development and establishment of a Medicare Part D: Pharmacy Quality Incentive Program that is built on a standard set of pharmacy performance metrics that drive better health outcomes and reduce the total cost of care.”

NACDS’ comments address such factors as the effects of current DIR practices on patients, pharmacies and competition, as well as savings that would result from improved patient health that could come with DIR fee reform and a pharmacy quality incentive program — both of which could increase the likelihood that patients take their medications as prescribed. The organization offered specific input on how "negotiated price" and "price concessions" are calculated and aimed at alleviating problems with the current setup. It also noted that CMS has the authority to take the actions it had proposed — actions that NACDS said it recommends.