Survey: Prescription Drug Costs Skewed by Hidden Fees

ALEXANDRIA, Va. — Most independent community pharmacists consistently encounter misleading and confusing fees imposed by prescription drug middlemen that negatively impact both pharmacies and patients and distort medication costs and reimbursement rates, according to a recent survey of 640 pharmacists conducted by the National Community Pharmacists Association (NCPA).

The survey documents the scope and effect of two relatively recent trends: Direct and indirect remuneration (DIR) fees imposed on community pharmacies and increased costs for patients at the pharmacy counter through copay clawback fees. At the center of each issue are pharmacy benefit management (PBM) corporations contracted by most health plans to oversee the drug benefit.

“DIR fees and copay clawbacks are serious problems for pharmacies and patients alike,” said NCPA CEO B. Douglas Hoey, RPh, MBA. “PBM corporations are inserting costs into the system on virtually everyone in order to fuel their profits and reward shareholders. Government officials and health plan sponsors must insist on greater transparency and oversight of these practices to ensure that plan costs and premiums go to their intended purpose: taking care of patients. NCPA will continue to work with Medicare officials, Congress and others toward that end.”

Sometimes weeks or months after medication is dispensed to a patient and a pharmacy is reimbursed, community pharmacies are assessed “DIR fees” that can turn a modest profit into a financial loss.

According to the survey responses:

• Two-thirds of pharmacists (67{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}) say no information is given as to how much and when DIR fees will be collected or assessed.
• Most pharmacists (53{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}) said DIR fees are assessed quarterly. Many complained that this lag time makes it difficult to operate a small business and impossible to determine at the time of dispensing whether the net reimbursement will cover their costs.
• While DIR fees started in the Medicare Part D program, most pharmacists (57{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}) say they now appear in some commercial plans as well.
• The financial impact of DIR fees is significant as 87{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of pharmacists said they significantly affect their pharmacy’s ability to provide patient care and remain in business.

Many pharmacists said DIR fees can total thousands of dollars each month. According to the survey, members report that the Aetna and CVS Caremark drug plans are the most egregious in this area. NCPA posted online comments from pharmacists that further illustrate the problem and also published an online video of pharmacists discussing the matter.

The survey also disputed claims by advocates for PBM corporations that DIR fees are actually “pay-for-performance” incentives to reward quality care.  Although PBM corporations may try to characterize these fees as “incentives,” the fact remains that these fees are extracted from all pharmacies – the caveat being that high-performing pharmacies may not get as much money withheld.  Pharmacists said that PBM corporations were not transparent about their DIR fee criteria and assessed DIR fees on pharmacies with the highest quality ratings.

Recently, 16 U.S. senators and 30 U.S. representatives wrote to the Centers for Medicare & Medicaid Services (CMS) and urged implementation of the agency’s proposed “negotiated drug price” guidance. It would require Part D plans to consistently report these fees to bring greater transparency into the program; improve accuracy of the Medicare Plan Finder utilized by patients to evaluate drug plans; and hopefully give pharmacists more clarity into their true reimbursement rate. NCPA also supports adoption of the guidance.

The second part of the survey explored copay clawbacks on patients, whereby PBM corporations instruct the pharmacy to collect an elevated copay amount and subsequently recoup the excess amount — and sometimes more —from the pharmacy.

“Patients purchase insurance with the presumption that they will save money using the plan’s designated health care providers,” Hoey added. “Copay clawbacks turn that logic on its head. A copay becomes a full pay – and then some.”