New Proposed DIR Fee Rule Is a Bold Move to Rein in Corporate Power
Washington, D.C. — In response to a new proposed rule from the Center for Medicare & Medicaid Services (CMS) that aims to address pharmacy Direct and Indirect Remuneration (DIR) Fees, the American Economic Liberties Project today released the following statement.
“The new proposed rule from CMS addressing pharmacy DIR Fees is a bold move to rein in corporate power while lowering drug costs and helping small businesses compete on a level playing field,” said Zach Freed, Advocacy & Outreach Manager at the American Economic Liberties Project. ”We applaud HHS Secretary Becerra for his courage in taking on corruption and greed by the PBM industry, and urge CMS to issue a strong final 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 ban DIR claw backs, rather than merely reforming them, will strengthen independent pharmacies and lower point of sale drug prices for millions of American seniors.
To learn more, read “How the FTC Protected the Market Power of Pharmacy Benefit Managers” in ProMarket.
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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.