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An Overview of DIR Fees

Community pharmacies are facing large DIR fees associated with Medicare Part D plans.  Surprisingly few community pharmacists are aware of the history and significance of DIR fees.  The Direct and Indirect Remuneration (DIR) fees were included in the original Part D legislation as a way for Health Plans to benefit from drug manufacturer rebates in order to pass those rebates on to patients as a way to improve healthcare and/or lower costs.  

In the first years of Part D, pharmacy was not included in the DIR structure.   That began to change as PBMs began assessing pharmacies fees related to DIR.  These fees are assessed multiple ways.  They can either be assessed as a percentage of price, a set fee, or as a “performance based” fee. Some can be quantified at point of sale, some (the “performance” based ones) cannot be assessed until months later. However they are assessed, DIR fees mean large quantities of money flowing backwards from the provider of a service, to a middle man.  Currently, the benefit to the patient of these PBM derived fees, if any, rests with the PBM and the corresponding health plan.

Combine these onerous fees with drug prices set below cost for reimbursement, and you have a recipe for community pharmacy disaster.  Community pharmacies are paying fees in the tens to hundreds of thousands of dollars annually.  No practice can long withstand that sort of cash drain

What can be done?  Actions on DIR fees are taking both short term and long term views.  On the national level, NCPA is leading a legislative effort to define, quantify and, make transparent the DIR process.  The contention is that pharmacies, or any business, cannot function within a payment methodology where the reimbursement cannot be determined at time of sale.  Other national efforts, being led by MedHere Today and others, are focusing on “performance” based DIR fees.  Many are of the opinion that the PBM dictated performance metrics do not represent a pharmacy’s true value to the health system, and in fact create barriers to quality patient care.

Even though there are ongoing efforts to quantify, define, and mitigate the effects of DIR fees on your pharmacy.  Until, and if, these efforts come to fruition DIR fees as designed by PBMs will be a part of the pharmacy landscape. The question becomes: “What can I do at my practice to mitigate those fees and survive another year?”

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