Today, the National Association of Chain Drugs Stores (NACDS) submitted comments to the Biden Administration in support of the Centers for Medicare and Medicaid Services’ (CMS) proposal to reduce prescription drug prices for Medicare Part D patients by providing transparency regarding pharmacy direct and indirect remuneration (DIR) fees.
CMS’ proposed rule would revise the definition of “negotiated price” for a covered Part D drug to include all pharmacy price concession DIR fees at the point of sale — a critical step toward comprehensive pharmacy DIR reform.
NACDS expressed appreciation for legislative and regulatory efforts at the federal level over the past eight years on the transparency aspect of pharmacy DIR reform and urged CMS to finalize the rule for contract year 2023.
NACDS said in the letter that the Association’s support “is premised on the simple fact that the proposal will better align marketplace competition with the interests of Medicare patients, and lead to lower total healthcare costs, including lower out-of-pocket costs for beneficiaries. This reform promotes better medication adherence, mitigation of health disparities, and in turn, better health outcomes.
“Of utmost importance: this proposal is a win for the nation’s Medicare patients. In fact, requiring pharmacy price concessions in the negotiated price is expected to reduce beneficiary costs by $21.3 billion over 10 years, or approximately 2 percent.”
NACDS also noted that several additional actions must be taken by CMS to better serve Medicare patients and to protect the viability of pharmacies serving them in the Medicare Part D program:
- CMS should finalize the proposal because the resulting [pharmacy DIR fee] transparency is a critical, overdue step in the right direction for patients and pharmacies in the Medicare Part D program.
- CMS should implement regulatory guardrails to successfully effectuate the proposed reform, including:
Guardrail 1: CMS should evaluate whether reimbursement reflected at the point of sale could impact beneficiaries’ access to pharmacies.
Guardrail 2: CMS should also apply the negotiated price definition to the coverage gap.
Guardrail 3: CMS should ensure that the proposed rule can be swiftly operationalized for contract year 2023.
Guardrail 4: CMS should support pharmacies’ need to ensure cash flow capabilities through standardized, transparent, predictable, and relevant performance measures.
Guardrail 5: CMS should conduct a thorough analysis on the direct impact such proposal will have on pharmacies and potentially patient access.
- CMS should implement standardized pharmacy measures to effectuate comprehensive pharmacy DIR reform that best serves Medicare patients and improves healthcare quality, equity, and reduce preventable spending.
- CMS should finalize the proposed rule because CMS has the requisite legal authority to promulgate and finalize this proposal.
Between 2010 and 2020, pharmacy DIR has increased exponentially — with DIR fees, net of all pharmacy incentive payments, growing more than 107,400 percent.
Additionally, “under today’s Part D program, regional and national chain pharmacies have reported that at times, performance-based price concessions can result in instances where pharmacy reimbursement is below a pharmacy’s costs to dispense drugs to Medicare patients. Others have reported that such deep concessions based on so-called performance have made preferred pharmacy networks unsustainable. This structure puts pharmacies in an untenable situation with respect to providing needed care for the patients and communities they serve,” NACDS wrote in its comments.
“For more than a decade, DIR fees have needlessly and artificially inflated seniors’ out-of-pocket drug costs and threatened the very existence of pharmacies, which continue to serve as trusted, convenient and equitable access points to critical care for the nation’s most vulnerable populations,” said NACDS President and CEO Steven C. Anderson. “The Biden Administration’s proposed rule is a positive step in the right direction in that it brings about transparency, yet work is needed to achieve comprehensive pharmacy DIR reform for seniors and for the retail pharmacies of all sizes and formats that serve them.
“NACDS would like to thank the members of Congress who have worked hard to bring about this important step toward DIR fee reform, including those who have led and sponsored the Pharmacy DIR Reform to Reduce Senior Drug Costs Act (S. 1909/H.R. 3554). Your leadership remains necessary to continue to advance still-needed aspects of DIR fee reform.
“NACDS appreciates the opportunity to provide comments, and we look forward to our continued work with CMS and the Administration on this crucial and ongoing issue. NACDS also thanks the membership for their ongoing and vigorous engagement by commenting on this rule, and by encouraging members of Congress to comment on this rule, through the NACDS RxIMPACT grassroots program.”
