Seeking reform: DIR fees in the spotlight amid push to rein in drug costs

Ideally, many in the industry would like to see DIR fees eliminated altogether, but having them assessed at the point of sale would at least provide some degree of relief, she said.

Part of the appeal of DIR reform among members of Congress is the fact that DIR fees impact both pharmacists and patients.

“It helps at the pharmacy counter for patients because if the patient is paying a co-pay on an inflated price at the counter, then they’re paying too much,” Bernstein said. “If this is all moved up front, then what the patient is paying at the time is what their co-pay or co-share will be.”

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Pharmacies simply need to know when they dispense the drug what the actual cost of that drug is, including the impact of any rebates and fees, she said. “At this rate, pharmacies are dispensing products at below their actual cost, and that just can’t continue. Pharmacies can’t survive on that model.”

A Partnership with PBMs
The problem needs to be treated as a partnership between pharmacies and PBMs, Bernstein said. “We need to work together to make sure that patients have the ability to go to their local pharmacy, and to choose where they want to go.”

APhA disagrees with the assertion that DIR reform would actually end up costing beneficiaries more, she said. “It’s a matter of ensuring that all of the facts are laid out for Congress and they can see really what needs to be done here and what’s the right way to go. CMS can also approach this and fix it on their own, but at the same time, Congress can expressly fix this as well.”

[Read more: NCPA’s Hoey, HHS head Becerra discuss community pharmacy priorities]

The APhA-NCPA lawsuit is currently making its way through the U.S. District Court in Washington, D.C., where HHS has filed a motion to dismiss.

In addition to the lawsuit and potential congressional action, the APhA and other groups are also working at the state level to gain greater transparency and to reform the current relationship with PBMs. Several states have taken action and “the trend is moving towards greater oversight in the states,” Bernstein said.

“Having a federal fix that’s more uniform would be very helpful, but we need to approach this from all angles,” she said.

Ronna Hauser, vice president of policy and pharmacy affairs at the NCPA, agreed, adding that congressional action through the budget reconciliation process could be the “quickest, surest route” to DIR reform.

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“We’ve been working diligently for years to try to fix DIR one way or another, whether it’s legislative, administrative or legal,” Hauser said. “We’ve been in close contact with the Senate Finance Committee, and we know Chairman [Ron] Wyden is supportive of DIR reform … so we’re definitely hopeful that we will see reform included.”

She counted DIR reform among the NCPA’s top two priorities in the current budget reconciliation effort, along with a ban on Medicaid and Medicare spread pricing, through which the association alleges that pharmacies are under-reimbursed.

“We have been talking to all our champions on the Hill, especially the majority leadership, members in Congress and the requisite staff and all of the committees of jurisdiction,” Hauser said. “We’re making sure the independent pharmacies’ priorities are known and making sure there’s a pathway forward through all these discussions for our top two priorities.

[Read more: Organizations make push for pharmacy DIR reform]

“We know that there’s a lot more work to be done to get fair reimbursement for pharmacies and more transparent and fair reimbursement to pharmacies, but at this point, we’re still focused on just stopping the clawbacks,” she said.

Some actions on all of the industry’s efforts around DIR reform could take place during the coming weeks and months, but the specific timing remains uncertain. Even if there are changes to the way DIR fees are assessed, it will likely be another year or two before new processes and pricing are put in place, Hauser said, citing the time required to renegotiate contracts and the fact that much of the contract negotiation for next year has already been completed.

Retailers Seek Relief
Devan Conley, a staff pharmacist at TrueCare Pharmacy in Concord, N.C., said retailers like his end up at the mercy of insurers when it comes to setting prices for prescriptions.

[Read more: NCPA to CMS: Address 91,500% hike in DIR fees]

“The people who care the most are at the very bottom of the chain, and we’re the ones doing the most work,” he said. “We’re the ones facilitating the discussion between the patients and the doctors. We’re the ones that are seeking those prior authorizations to the insurance company. We’re the ones facilitating all the discussions to make sure these drugs are covered.”

The unpredictable nature of DIR fees means that pharmacies need to take into consideration that insurers could seek to “claw back” as much as 10% of the price of a drug, Conley said. “That’s pretty hefty. Sometimes those DIR fees actually put you in the red on many claims. At first glance, it looks like you’re profitable, but then when you get this clawback, it’ll put you in the red.”

The uncertainty around the precise amounts that could be “clawed back” and other opaqueness in drug pricing practices turn accounting into a guessing game.

[Read more: DIR reform act gains praise from FMI]

“We’re trying to operate under the confines of a specific system, but ultimately, they don’t really give us clear expectations of that system,” Conley said.

Pharmacy audits conducted by payers add another level of complexity that pharmacies need to cope with, as rebates can be lost over minor clerical errors or when patients don’t adhere to their medication regimens.

Josh Young, owner of TrueCare Pharmacy, also co-founded a Medicare payment plan called Troy Medicare that seeks to make pricing more transparent for pharmacy operators.

Troy Medicare uses a metric called the National Actual Drug Acquisition, or NADAC, which Conley said enables the company to calculate a better estimate for drug prices. North Carolina Medicaid also uses NADAC pricing, he said.

[Read more: NCPA urges CMS clear, consistent quality measurements for community pharmacies]

Troy Medicare also does not charge DIR fees and pays pharmacists a fair dispensing fee for the services they provide, Conley said.

“They don’t charge DIR fees because they’re trying to show CMS that it’s not necessary to charge,” he said. “You can have a viable business and you can have a plan that covers people’s medications, without requiring the use of DIR fees.” The plan has been gaining traction among providers in North Carolina, Conley said. “It’s a good model — it empowers those in the driver’s seat to actually take care of the patient,” he said.