07.24.18

Cassidy, Colleagues Urge Administration to Lower Prescription Drug Costs

WASHINGTON–U.S. Senator Bill Cassidy, M.D. (R-LA), joined 20 of his Senate colleagues in urging U.S. Department of Health and Human Services (HHS) Secretary Alex Azar to increase transparency and take action to lower prescription drug prices for seniors.

"We write to urge the Department of Health and Human Services to move forward with a proposal to meaningfully address skyrocketing drug prices by specifically addressing pharmacy direct and indirect remuneration (DIR) fees in the Medicare Part D program," states the senators’ letter to Secretary Azar.

Under the current system, when a Medicare Part D patient picks up a prescription, the patient is charged a percentage of the drug's cost as a co-pay. The pharmacist works with a pharmacy benefits manager (PBM) to collect the remaining payment from the patient's insurance company. The patient's co-pay is based on the drug's price at the point of sale, but PBMs are allowed to come back to pharmacies well after a drug is sold and pay less than the patient was originally charged by applying a fee, known as direct and indirect remuneration (DIR). As a result, seniors pay more out of pocket than they need to and pharmacies are forced to absorb the loss and face uncertainty in their reimbursements.

The senators are asking HHS to take regulatory action to require the reporting of DIR fees in the negotiated price at the point of sale, thereby lowering out-of-pocket costs for beneficiaries.

Earlier this year, Cassidy unveiled a white paper of new ideas to make health care affordable again, and introduced legislation to prohibit “Gag Clauses” that cause consumers to pay higher prices for prescription drugs and increase accountability in the 340B program to ensure drug discounts are passed on to patients. He also encouraged CMS Administrator Seema Verma to take action to improve drug pricing transparency in Medicare Part D.

In addition to Cassidy, senators signing the letter include Maria Cantwell (D-WA), Shelley Moore Capito (R-WV), Jon Tester (D-MT), Chuck Grassley (R-IA), James Inhofe (R-OK), Sherrod Brown (D-OH), John Thune (R-SD), Joe Manchin (D-WV), Roger Wicker (R-MS), Heidi Heitkamp (D-ND), John Boozman (R-AR), Angus King (I-ME), John Hoeven (R-ND), Jerry Moran (R-KS), Tom Cotton (R-AR), Steve Daines (R-MT), Joni Ernst (R-IA), James Lankford (R-OK), John Kennedy (R-LA), and Cindy Hyde-Smith (R-MS).

The full text of the senators’ letter is below:

Dear Secretary Azar:

We write to urge the Department of Health and Human Services to move forward with a proposal to meaningfully address skyrocketing drug prices by specifically addressing pharmacy direct and indirect remuneration (DIR) fees in the Medicare Part D program.

DIR fees imposed on pharmacies participating in Medicare Part D networks by plan sponsors and their pharmacy benefit managers (PBMs) have exploded in recent years and have had a crippling impact on patients, Medicare, and pharmacies. The retroactive nature of these fees means beneficiaries face higher cost-sharing for drugs and are accelerated into the coverage gap (or "donut hole") phase of their benefit. What's more, beneficiaries more quickly reach the catastrophic phase of the benefit, for which Medicare incurs more of the cost of the drugs. Finally, all retroactive pharmacy DIR fees are taken back from pharmacies months later rather than deducted from claims on a real-time basis. This reimbursement uncertainty makes it extremely difficult for pharmacies to operate and provide high-quality care to their patients.

Just this spring, the Centers for Medicare and Medicaid Services (CMS) collected information on including at least a portion of manufacturer rebates and all pharmacy price concessions like DIR in the negotiated price at point of sale, thereby lowering seniors' out-of­pocket costs at the pharmacy counter. CMS asserted its authority to address DIR through regulation but did not release any specific plan to do so. In HHS' blueprint on addressing drug prices, the Administration suggests a number of actions to reduce drug prices in Medicare but does not propose adopting its own proposal on addressing DIR. We ask this Administration to require the reporting of all pharmacy price concessions in the negotiated price at the point of sale. The administration has considered this type of policy several times over the past years, and the time to move forward is now.

In conclusion, we urge you to address retroactive pharmacy DIR fees in the Medicare Part D program to provide transparency that would benefit seniors and provide immediate savings at the pharmacy counter. We appreciate your consideration of this matter and look forward to hearing back from you.

Sincerely,

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