There are a lot of factors that contribute to keeping prices high. One of them is fees charged by companies that most customers don’t even know exist, called pharmacy benefit managers, or PBMs. And after years of effort, this week the agency in charge finally announced steps to rein in the fees PBMs charge, and pass those cost savings on to Ohioans at the pharmacy counter.
These PBMs are essentially middlemen. We’ve already done important work to ban pharmacy gag clauses, increase transparency, and ban the predatory PBM practice called “spread pricing.”
But we have more work to do. PBMs also charge what are known as “direct and indirect remuneration,” or D-I-R Fees, to pharmacies. Those pharmacies, especially smaller independent pharmacies, are then often forced to pass those fees on to customers in the form of higher prices, or risk closing their businesses and leaving their communities without a local pharmacy.
These unnecessary fees have gone up dramatically over the last decade. In June, the Centers for Medicare and Medicaid Services – or CMS – reported that pharmacy DIR fees rose by 91,500 percent from 2010 to 2019. (And no, that’s not a typo – we really mean 91 thousand percent.)
In some cases, the fees can be so high and eat up so much of small pharmacies’ budgets, it puts them out of business. Over the last two years, 250 independent pharmacies in Ohio have closed, in part because DIR fees have made it impossible for them to remain in business.
These fees serve virtually no purpose, other than to raise prices for seniors and raise costs for pharmacies.
It’s why I introduced the bipartisan Pharmacy DIR Reform to Reduce Senior Drug Costs Act last year. And it’s also why I joined with a bipartisan group of my colleagues to write to CMS in October, asking the agency to act to eliminate these DIR fees, to help lower prescription drug prices for seniors on Medicare Part D. And CMS is heeding our call, and finally taking action.
CMS has the authority to take many steps on its own to curb these fees, and they estimate that the change we’re asking for will save Medicare beneficiaries between $7 and $9 billion on their prescriptions. This week, they began taking the actions we called for, issuing a proposed rule that would get these fees under control and pass on cost savings to seniors.
Over the coming weeks and months, I’ll be monitoring the work CMS is doing, to ensure the agency follows through on its promise to bring down these fees, and save Ohioans money at the pharmacy.
With so many seniors on fixed incomes worried about rising drug prices, we need to stop these corporate middlemen from making the problem worse. And we need to make sure our local pharmacies can continue to serve their communities.
Sherrod Brown, D-Ohio, is a United States senator.
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