Congress must act to lower costs and keep community pharmacies in local neighborhoods

(NCPA, October 13, 2019 by B. Douglas Hoey, NCPA)

Ask almost any senior citizen about their finances and they’ll tell you one of the greatest challenges is the high price they pay for medicine. Unfortunately, an opportunity to rein in prescription drug costs just passed the administration by and now Congress needs to act.

There was great hope that the Centers for Medicare and Medicaid Services (CMS) might fix a loophole that allows a few large, powerful companies to increase seniors’ out-of-pocket costs at the pharmacy counter. Unfortunately, CMS failed to act and now we can only hope our elected leaders will intervene.

The loophole involves what are known as direct and indirect remuneration fees (DIR), industry jargon for your insurance company charging you an inflated price for prescription drugs and taking money back from what it told the pharmacy it would pay.

These adjustments are usually made by companies that are suppose to manage drug costs called pharmacy benefit managers (PBMs). For years, these shadowy middlemen that administer Medicare prescription drug benefits have been lowering the amount they reimburse a pharmacy or a prescription long after the prescription was filled. This practice has left beneficiaries paying more than they should for medicine — at least $200 in overcharges per senior per year, on average.

As an example, imagine a senior needs a heart medication priced at $100 at the local pharmacy. Their Medicare Part D plan requires they pay 25 percent out of pocket, as the senior forks over $25. The pharmacy expects to be reimbursed the other $75 through the PBM.

But then months later, the PBM “adjusts” the price retroactively from $100 to $80. The senior should have only paid $20 for their medicines, but they don’t get the extra money back

What’s more, the pharmacy loses out, too. The price the pharmacy was told to charge by the PBM was based on an expected reimbursement of $75, but the PBM will only pay $55 — and they take $20 out of the pharmacy’s next payment.

Many community pharmacies find they lose money on prescriptions this way. And sadly, this unfair behavior increased an astonishing 45,000 percent under Medicare Part D form 2010 to 2017. It’s becoming almost standard for PBMs to change prices after the fact and demand repayment by local pharmacies all the while increasing the price senior pay for prescriptions.

There’s no reason to allow PBMs to continue to line their pockets at the expense of American’s seniors and their affordable, convenient access to prescription drugs. Congress should help Medicare beneficiaries keep more of their hard-earned money and help community pharmacies stay open for patients by fixing the DIR loophole as soon as possible.