National Community Pharmacists Association Files Lawsuit Against HHS to Eliminate Spiraling Pharmacy DIR Fees

NCPA: Community pharmacies can’t wait any longer for relief

NCPA January 15, 2021

ALEXANDRIA, Va. (Jan. 15, 2021) – Today the National Community Pharmacists Association filed a federal lawsuit against U.S. Department of Health and Human Services regulations that enable pharmacy direct and indirect remuneration (DIR) fees that are driving small business neighborhood pharmacies out of business. The lawsuit alleges that the fees are without reasonable transparency, and they conceal from patients and taxpayers the true cost of prescription drugs.

"Pharmacy clawbacks are fundamentally dishonest and unfair for patients and pharmacies, and they make it impossible for pharmacies to predict their costs," says NCPA CEO B. Douglas Hoey, pharmacist, MBA. "60 percent of community pharmacies believe they may go out of business in the next two years if the clawbacks are not addressed. That's not just a threat to community pharmacies but also to the millions of patients who rely on them, whether during a public health emergency or otherwise. This is about fairness for community pharmacies and access for their patients.

"NCPA and others have pursued a fix through the regulatory and legislative processes for years," Hoey says. "We have exhausted those options and unfortunately, small business independent pharmacies cannot wait any longer."

The case, NCPA v. Azar, was filed in the U.S. District Court for the District of Columbia. In its complaint, NCPA argues that a rule allowing price concessions to be imposed on pharmacies long after the point of sale violates the language and intent of the Medicare Act. The lawsuit addresses an exception included in a Centers for Medicare & Medicaid Services rule that states all negotiated prices must include price concessions from network pharmacies except those contingent price concessions that cannot reasonably be determined at the point of sale. The exception has opened a "pandora's box" for Part D plans and their pharmacy benefit managers (PBMs), which are among the richest corporations in the world. A recent study cited in the complaint showed that pharmacy DIR fees have increased 1,600 percent since 2015, with $4 billion in DIR fees being squeezed from pharmacies in 2017 alone. Further, the exception was inserted into the final rule without providing notice to interested parties or letting them comment. That, says NCPA, violated the legal process for proper rulemaking.

"PBMs force pharmacists to make an impossible choice: pay the concessions or lose your patients. Pharmacies have no practical ability to negotiate better terms because these are always take-it-or-leave it contracts. PBMs have been exploiting the loophole to extract billions from pharmacies without any benefit for patients," says Hoey. "Our backs are against the wall, and we won't stop fighting until we win."

BACKGROUND:

Under the current system, PBMs – the middlemen hired by health insurers to administer prescription drug benefits – often claw back fees from pharmacies well after a transaction. Pharmacy DIR fees are recouped from pharmacies weeks or even months after a medication has been dispensed and the patient has left the pharmacy.

The fees also disadvantage seniors, who are assessed higher cost-sharing (prescription copay) based on their Medicare Part D deductible rather than the retroactive, lower adjusted price. The result is seniors pay more out of pocket then they should until they reach Part D's "catastrophic coverage" where taxpayers are then responsible for the majority of the costs.

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Founded in 1898, the National Community Pharmacists Association is the voice for the community pharmacist, representing more than 21,000 pharmacies that employ 250,000 individuals nationwide. Community pharmacies are rooted in the communities where they are located and are among America's most accessible health care providers. To learn more, visit www.ncpa.org.

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