NGA Disappointed CMS Ruling Leaves Out Pharmacy DIR Fee Reforms

May 17, 2019

Arlington, VA- Today, the National Grocers Association (NGA), the national trade association representing the independent supermarket industry, expressed its disappointment after a long-awaited drug pricing rule released yesterday evening by the Centers for Medicare & Medicaid Services (CMS) failed to include necessary reforms to pharmacy price concessions and the retroactive nature of direct and indirect remuneration (DIR) fees. Pharmacy DIR fees are imposed by plan sponsors and/or third-party administrators of prescription drug programs, commonly known as PBMs, on pharmacies participating in Medicare Part D networks. However, these fees are assessed well after the point of sale and lack transparency. DIR fees are also unpredictable as they have no connection to a pharmacy’s performance or other standards. After over 4,000 comments were submitted on DIR fees, including comments by NGA – which have increased exponentially in recent years – the administration decided against implementing any changes.

“While we are still reviewing the 200-page final rule, we were disappointed that the final rule fails to enact reforms to pharmacy DIR fees,” said Greg Ferrara, NGA Executive Vice President. “Pharmacies operated by independent supermarkets have seen a tremendous and unexplainable increase in retroactive DIR fees in recent years. NGA will continue to call on the Trump Administration and Congress to address these out of control fees that jeopardize the future of local, independently owned pharmacies across the country and the communities they serve.”

Independent supermarkets operate 3,000 pharmacies across the country and pharmacy DIR fees have had a significant impact on their ability to conduct business and serve their communities. Over the last year alone, NGA members have reported a dramatic increase between 87 percent and 250 percent in pharmacy DIR fees.