Economic Liberties & ILSR Urge CMS to Address Unfair PBM Practices in Proposed DIR Rule

March 7, 2022 Press Release

Washington, D.C. — The American Economic Liberties Project and the Institute for Local Self-Reliance today submitted a comment to the Center for Medicare and Medicaid Services on unfair practices by PBMs.

“The proposed rule by CMS is a bold and welcome move that will lower drug costs and help community pharmacies compete on a level playing field,” said Zach Freed, Advocacy & Outreach Manager at the American Economic Liberties Project. “In issuing its final rule, we urge CMS to think through any potential contractual game-playing by PBMs to skirt this rule, and to close the coverage gap loophole currently written in the proposed rule.” 

PBMs, or Pharmacy Benefits Managers, are middlemen who process pharmaceutical benefits for Medicare, Medicaid. In theory, plans pay PBMs to bargain down the price of drugs and to reimburse pharmacies for patients’ prescriptions. In practice, however, PBMs often abuse their position as middlemen to drive up the cost of drugs, over-charge Medicare and Medicaid, and skim as much money as possible from independent pharmacies. 

In recent years, PBMs and Part D plans have increasingly imposed unfair DIR and other fees to steal from independent pharmacies. DIR fees allow PBMs and Plans to retroactively charge pharmacies for failing to adhere to fake “quality control” programs. According to CMS, the use of DIR fees increased by more than 90,000% from 2010 to 2019. Pharmacies now pay nearly $100,000 a year in retroactive DIR fees. Because these fees are levied long after the sale, pharmacies are often caught by surprise and have little recourse. Secretary Becerra’s decision to directly rein in PBM claw backs, rather than merely reforming them, will strengthen independent pharmacies and lower point of sale drug prices for millions of American seniors.

Read the comment here.

Learn more about Economic Liberties here.



The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.