DIR Fees

“Direct and indirect remuneration” or “DIR” fees have become one of the most detrimental policies enacted by the PBM industry against pharmacies in recent history. Originally, the concept of “direct and indirect remuneration” was advanced by CMS in the drug price reporting context to ensure that Part D sponsors and PBMs accurately report rebates and other “price concessions” from manufacturers or other third parties which could not be reasonably determined at the point-of-sale. However, PBMs have manipulated the term “DIR” to justify the assessment of unreasonable and oppressive fees on pharmacies in an opaque and non-transparent manner. PBM-imposed DIR fees can take many forms, and can be as high as 5.5% of the total value of the claim submitted by the pharmacy – often causing the pharmacy to be reimbursed below their acquisition costs for the drugs. Certain types of pharmacies, such as specialty pharmacies and dispensing physicians, are often disproportionately impacted by DIR fees, given the high-cost, low-margin medications they dispense more frequently. Perhaps most critically, DIR fees are calculated retrospectively, and are therefore assessed against pharmacies many months after the pharmacies have been reimbursed on claims submitted to the PBM. The uncertainty of the amount of DIR fees, coupled with the impact upon pharmacy reimbursement, has had a profound impact on pharmacy operations throughout the country.

However, neither PBMs nor PBM-owned Part D plan sponsors are above the law. Many laws and regulations exist which may curtail the PBMs’ ability to impose these draconian and abusive fees. Frier Levitt is well-versed in the issue of DIR fees, and has developed multiple strategies to aid pharmacy clients suffering from the imposition of DIR fees. We have utilized various legal avenues, including lawsuits and arbitrations against PBMs and plan sponsors, to challenge the propriety and legality of DIR fees on behalf of pharmacies nationwide. Often, this begins with submitting a “Notice of Dispute” with applicable PBMs as a precursor to any additional legal action.

If your pharmacy is suffering from the consequences of DIR fees, contact Frier Levitt today.


Related post: VIDEO: Medicare Part D: DIR Fees and “Preferred Cost-Sharing Networks”