The $3.4 Billion Health Care Game-Changer

The $3.4 Billion Health Care Game-Changer
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We’re smack in the middle of football season, and if you’re a college football fan like me, you’ve seen your fair share of heart-stopping finishes where one play made the difference and changed the game’s direction and momentum.

A game changer, they call it.

It may not be as exhilarating or garner the same national attention, but the world of health care just experience a game changer of its own: new research that should move the ball down the field in the debate over retroactive pharmacy Direct and Indirect Remuneration (DIR) fees and the federal legislation we're supporting that would ban them. These fees are taken back retroactively, sometimes months later, instead of extracted at the point of sale, making it difficult for community pharmacists to operate a small business.

That legislation referred to above is the Improving Transparency and Accuracy in Medicare Part D Drug Spending Act (S. 413 / H.R. 1038), which would prohibit Medicare Part D plan sponsors and pharmacy benefit managers (PBMs) from retroactively reducing payment on clean claims submitted by pharmacies under Medicare Part D.

We have new research — commissioned by the National Community Pharmacists Association (NCPA) and prepared by Wakely Consulting Group, one of the top actuarial firms in the country — that establishes a private score for this legislation, estimating how much it will cost or save the federal government. Obviously, knowing that score is often essential to whether a piece of legislation will advance in Congress. Bills with significant price tags almost always have a tougher go of it.

But for the pharmacy DIR bill, the news is a real game-changer. The Wakely research shows that eliminating retroactive pharmacy payment reductions — or post point-of-sale pharmacy "DIR fees" — in Medicare Part D would save the federal government $3.4 billion over 10 years.

No, that’s not a typo. It really is billion with a "B." Even when it comes to government spending, that’s a lot of money. Perhaps more importantly, the Wakely study shows that DIR legislation will result in extraordinary taxpayer savings without subtracting any benefits seniors currently receive. And for community pharmacies, banning these after-the-fact fees is the fair way to achieve predictability in reimbursements for the medications pharmacists buy and dispense.

Retroactive DIR fees hurt our nation’s 22,000 independent pharmacies – small businesses that operate on razor-thin margins – by unexpectedly clawing back a portion of the price of a drug often months after a transaction, sometimes leaving the pharmacy upside down on the transaction. That’s no way to operate a business, and it hurts community pharmacies every day.

But pharmacies aren’t the only ones hurt. Our patients suffer too, and so does the Medicare program – and the American taxpayer. These after-the-fact fees lead directly to inflated prescription costs and higher cost-sharing for our Medicare patients because the higher costs drive many patients into the Medicare coverage gap faster. That’s what the Wakely research shows, as well as a January 2017 analysis by the Centers for Medicare & Medicaid Services that said DIR fees on pharmacies do not reduce the cost of drugs for beneficiaries at the point of sale and in fact push seniors into the “donut hole” coverage gap and, subsequently, the catastrophic phase of the Part D benefit faster.

This is game-changing news for pharmacies, Medicare, the nation’s seniors and the federal budget. But the game's really just started. Community pharmacists are contacting their members of Congress to share this study and to encourage them to move quickly to advance this important legislation.

Armed with this research, robust in its scope and thoroughness, Congress now has an opportunity to enact its own game-changer. We urge them to pass the Improving Transparency and Accuracy in Medicare Part D Drug Spending Act and help change PBMs' retroactive DIR fee game and save the taxpayers more than $3 billion over the next 10 years.

That’s not only a game changer – that’s a game winner.

B. Douglas Hoey, Pharmacist, MBA, is the Chief Executive Officer of the National Community Pharmacists Association.

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