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May 08 2020

Pharmacies Get No Respite from DIR Fees During Pandemic

Pharmacists have shown up every day during the COVID-19 pandemic, ensuring uninterrupted access to medications, counseling patients, and in some states, administering COVID-19 testing.  But as invaluable as pharmacists have been during this unprecedented period, something a little less welcome has also shown up - DIR Fees.

It seems that while direct renumeration fees (DIR fees) may be no match for the COVID-19 virus, they may, in fact, pose a serious threat to pharmacy well-being.  An April 2020 survey conducted by the National Community Pharmacists Association, intended to "gauge pharmacy economic health during the COVID-19 pandemic," found almost half of respondents rated the overall financial health of their pharmacy as either "somewhat poor" (35 percent) or "very poor" (13 percent).

The survey, which was reported on by Drug Topics, also asked about the biggest impediments to pharmacies' financial status.  DIR fees topped the list at 52 percent.  Other challenges included: Decreasing reimbursements not related to DIR fees (26 percent); cashflow due to coronavirus (9 percent); and pharmacy benefit manager consolidation and vertical integration (7 percent).

A separate report by Drug Topics found the rate of DIR fee increases has been so significant, that prior to the onset of the pandemic, several pharmacies had already been forced out of business.  "DIR fees have skyrocketed by 1600 percent in the last five years, totaling $8.5 billion since 2013," the article noted, citing analysis from XIL Consulting.

Further, a report by Drug Channels Institute (DCI) estimated DIR payments exceeded $9.1 billion in 2019, a rate "faster than most people realize."

Eliminating DIR fees has been at the top of pharmacies' legislative priorities lists for many years.  But, in the heat of the pandemic, the fees' inherent unfairness seems to have caught federal lawmakers' attention.

In late April, a bi-partisan group of 115 members of the U.S. House of Representatives wrote a letter to Speaker Nancy Pelosi (D-CA), urging her to prioritize legislation that would "remove the barriers that threaten pharmacy financial stability and a pharmacy's ability to support patents."  This can be achieved, the letter continued "by enacting much needed pharmacy DIR claw back reform."  The letter cited documentation by the Centers for Medicare and medicaid Services (CMS) that DIR fees increased by 45,000 percent between 2010 and 2017, and "threaten to cause more pharmacies to close their doors."

The letter appears to be intended to jumpstart the forward momentum the issue had achieved prior to the pandemic.  According to the National Association of Chain Drug Stores, positive developments included a call by President Donald Trump in the 2020 State of the Union Address for a bi-partisan drug pricing bill, along with a Senate Finance Committee drug pricing package that includes claw back fee reform.  At the House level, NACDS notes a quality-measure provision is included in the drug pricing bill that was approved in December 2019.

Now though, with pandemic-related health and economic initiatives having seized the Congressional agenda, it seems DIR reform faces and uncertain outcome.

In the interim, pharmacy managers can use their technology systems to carefully track all related payments and transactions.  This includes records of all reimbursements, rebates and discounts, and drug cost comparisons.  In addition, by carefully tracking historical DIR fee assessments, a pharmacy can potentially gauge the amount of future assessments.

Meanwhile, pharmacists will continue to serve on the frontlines, helping to ensure patients receive their medications, and providing the steady hand so many Americans seek during this period of uncertainty.