New Proposed Rule May Lower Medicare Patients’ Out-of-Pocket Prescription Drug Costs

ALEXANDRIA, Va. (December 3, 2018)—A new drug pricing rule (CMS-4180-P), proposed by the Centers for Medicare & Medicaid Services (CMS), released Monday, November 26, considers policies the National Community Pharmacists Association and CMS say will lower patients’ out-of-pocket costs at the pharmacy counter and lead to a more competitive and efficient Part D program. NCPA advocated aggressively for many of the policy proposals contemplated in the proposed rule.

Though some of the policies floated in the proposal must still be translated to regulatory language, NCPA says the policies addressed in the rule are necessary and long overdue to ensure greater drug pricing transparency for patients and pharmacies alike. Among several proposals contained in the rule, NCPA says most significant is the proposal to account for pharmacy price concessions—also known as direct and indirect remuneration fees—at the point-of-sale.

“The current DIR system isn’t transparent, isn’t efficient and isn’t fair, not to patients and not to pharmacies,” said NCPA CEO B. Douglas Hoey, MBA, a pharmacist. “It’s a one-sided system—a point the proposed rule clearly observes.”

Under the current system, pharmacy benefit managers—the middlemen hired by plan sponsors to administer prescription drug benefits—often claw back fees from pharmacies well after a transaction. Those fees, called direct and indirect remuneration, are often unpredictable and seemingly unconnected to a pharmacy’s performance related to adherence and other standards. The fees also disadvantage patients, who are assessed a higher cost-share against their Part D deductible rather than the retroactive, lower adjusted price. The result is to push patients more quickly into the so-called Part D donut hole, at which point the patient is responsible for a considerably larger portion of their prescription drug costs.

The proposed rule would shift those price concessions to point-of-sale, meaning that patients would realize the benefit of the adjusted price and pharmacies could have greater predictability in cash flows.

“We wholeheartedly support moving pharmacy price concessions to point-of-sale to benefit patients in the form of lower cost shares,” said Hoey. “Such a move would also eliminate retroactive claw-backs charged by PBMs and allow pharmacies a more accurate accounting of drug costs and reimbursements. We’re grateful CMS crafted the proposed rule to reflect NCPA’s recommendations, and we plan to advocate aggressively for formal adoption of that measure.”

In addition to noting how “the one-sided nature of pharmacy payment arrangements that currently exist also creates competition concerns by discouraging independent pharmacies from participating in a plan’s network and thereby increasing market share for the sponsors’ or PBM’s own pharmacies,” the proposed rule says that “pharmacy price concessions, net of all pharmacy incentive payments, grew more than 45,000 percent between 2010 and 2017,” an increase NCPA says is clearly unsustainable.

Hoey said, “Including in the negotiated price of a drug at the point of sale all fees paid by pharmacies to a Part D plan’s PBM means more savings for patients at the pharmacy counter. This transparency is good for seniors, and good for community pharmacies. Let’s finalize this proposed rule and continue in the important work of driving better health outcomes, lowering costs, and increasing transparency.”

Visit ncpanet.org for more information. Find a fact sheet on the proposed rule, here.