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01/10/2022

Food Industry Supports Gov’t Effort to Lower Drug Costs

FMI, NGA come out in favor of proposed rule addressing hidden “claw back” fees
Bridget Goldschmidt
Managing Editor
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Pharmacy benefit managers' hidden "claw back" fees force seniors to pay more out of pocket for their prescriptions while pharmacies must cover the fees.

FMI – The Food Industry Association and the National Grocers Association have come out in support of a proposed rule from U.S. Department of Health and Human Services Secretary Xavier Becerra and U.S. Centers for Medicare and Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure that would address the hidden “claw back” fees charged by drug middlemen.

The payments, known as direct and indirect remuneration (DIR) fees, were meant to be applied at the point of sale to lower the cost of prescription drugs for Medicare recipients. However, most DIR fees are “clawed back” from pharmacies by pharmacy benefit managers (PBMs) long after a drug has been dispensed to the customer, and therefore are seldom used as intended to reimburse or otherwise reduce the cost of a drug, meaning that seniors are forced to pay more out of pocket for their prescriptions while pharmacies must cover the fees. The proposed rule would require Medicare Part D plans to apply all price concessions they receive, including DIR fees, at the point of sale.

“Supermarket pharmacies are proud to serve as health and well-being destinations, providing customers with the full range of pharmacy products and services – including COVID-19 tests and vaccines – at the same location where they already purchase nutritious food and other household items,” noted Leslie G. Sarasin, president and CEO of Arlington, Va.-based FMI, which represents the 12,000 supermarket pharmacies operated by its member companies. “Despite their essential role in serving communities, particularly during the last two years amid the pandemic, supermarket pharmacies are struggling to stay in business due to the anticompetitive practices of PBMs, such as the collection of DIR fees. As a result, some FMI members have been forced to close or sell their pharmacies while others are considering having to do so in the future, leading to significantly reduced access for consumers. 

Added Sarasin: “This proposed rule would generate savings and increase price transparency for pharmacies and their customers alike by halting predatory practices among PBMs.” 

NGA members operate more than 3,000 pharmacies within their stores,” said Greg Ferrara, president and CEO of Washington, D.C.-based trade organization, which advocates for the independent grocery sector. “Independent grocers have been at the heart of their communities throughout the pandemic, providing food, medications, and other services including COVID-19 vaccinations. The proposal by CMS will help keep these essential businesses open and helping the folks who need it most.”

According to the federal government, pharmacy DIR fees have risen by 91,500% between 2010 and 2019. 

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