Pharmacy DIR Fees and NCPA Advocacy Efforts

Fixing direct and indirect renumeration (DIR) fees has been NCPA's top priority for several years, and NCPA is grateful to our members and partners for their efforts to influence policymakers.

With the recent Medicare Part D final rule, NCPA has scored some major wins in DIR reform. While not perfect, this final rule is the latest chapter of years of advocacy by NCPA and member pharmacies for Part D changes that will make pharmacy reimbursement more transparent and predictable.

First, the final rule redefined “negotiated price” to include all pharmacy price concessions at the point of sale.
Second, the final rule closed the coverage gap loophole. Pharmacy price concessions will now be applied to the negotiated price across all phases of the Part D benefit, including the coverage gap phase.
And lastly, CMS stated that it was sympathetic to small business pharmacist cash flow concerns.

DIR includes rebates from manufacturers, administrative fees above fair market value, price concessions for administrative services, legal settlements affecting Part D drug costs, pharmacy price concessions, drug costs related to risk-sharing settlements, or other price concessions or similar benefits offered to purchasers that would serve to decrease costs incurred under Part D by the plan sponsor. According to CMS, in 2020, pharmacy price concessions were 4.8 percent of Part D gross drug costs ($9.5 billion), up from 0.01 percent ($8.9 million) in 2010.

Simply put, DIR: increases plan revenues; shifts costs to high utilizing beneficiaries and the government; and obscures the true costs of prescription drugs for consumers and the government. This rule will limit the ability of plan sponsors/PBMs to reap the benefits of pharmacy DIR fees.