Controversy Heats Up Over Pharmacy Benefit Manager DIR fees

November 10, 2017| CATEGORIES: Press Mention , DIR Fees

Pharmacy benefits managers (PBMs) are in hot water again if small and specialty pharmacies’ voices can be heard. Besides a litany of complaints from various pharmacy industry stakeholders about PBM operations and business tactics—from a lack of transparency to controlling formularies—now PBMs are being accused of retroactively applying direct and indirect remuneration fees (DIR) to pharmacies.

DIR fees—arrangements between Part D plans/PBMs and pharmacies—include fees for network participation, periodic reimbursement conciliations, failure to comply with quality measures and the gap between a target reimbursement rate in a pharmacy agreement and the aggregated rate actually realized by a pharmacy. They fees often are assessed at different intervals rather than at point of sale (POS).

A paper commissioned by the Community Oncology Alliance and prepared by Frier Levitt law firm, describes original DIR fees as payments or other reimbursement received by PBMs from a variety of sources to lower the ultimate “true cost” of a medication. That has since transitioned into “backdoor” fees imposed by PBMs on pharmacy providers after a drug claim is submitted, adjudicated and even paid out to a pharmacy, according to the paper.

Complaint: Fees lack clarity, real-time assessment

The National Community Pharmacists Association (NCPA) argues that DIR fees lack sufficient disclosure to pharmacies or contracting agencies as to how they are calculated at the time of contract initiation or when fees are assessed and reported.

Ronna Hauser, vice president, pharmacy affairs, NCPA, calls DIR fees “one large take back or concession,” reconciled with no specific timeframe and no clarity as to which prescription they refer.

The primary objection is that DIR fees are not determined at the point of sale; instead, they retroactively claw back a portion of claims already paid rather than deducting them from claims in real time. The long processing period makes if difficult for small pharmacies to predict whether they are going to break even on a transaction and to manage their costs, she says.

“DIR fees are even muddier because they create a fee schedule around adherence and unpredictable quality measures at the plan level, not at the pharmacy level,” Hauser says. “There are exact guidelines for STAR metrics but not for DIR fees, which vary depending on a population or specific region. That makes these fees hard to track and account for, making it difficult to forecast costs.”

Ted Okon, COA executive director, agrees that DIR fees take on different forms and shapes under the guise of a quality proposition. “PBMs assess them arbitrarily; they don’t even relate to a specific drug,” he says. “They are a form of extortion but if we don’t pay, we are out of a PBM network.”

He points out that DIR fees are based on a drug’s list price, not the actual price and that PBMs have a vested interest in the highest list price in extracting rebates.


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