Who’s to blame for high drug prices? Most would probably point the finger at Big Pharma, but a group representing pharmacists say that a big part of the problem is middlemen empowered by insurance companies.

“Direct and indirect remuneration fees imposed on community pharmacies and increased costs for patients at the pharmacy counter through copay clawback fees” are the two main issues driving up the cost of meds at neighborhood drug stores, says a report from the Alexandria, Virginia-based National Community Pharmacists Association.

Both problems, says the group, are driven by pharmacy benefit management companies. Such companies are increasingly hired by health insurers to oversee their prescription drug benefits.

Direct and indirect remuneration fees known as DIR fees are often imposed on pharmacies long after the prescription was made. According to the group, the fees can turn a “modest profit into a financial loss” for the pharmacist.

President and CEO of the Pharmaceutical Care Management Association, Mark Merritt, responded to criticism of the DIR fees saying, “Direct and Indirect Remuneration (DIR) is a form of performance-based payment used by PBMs to promote value and quality and helps keep premiums down for Medicare beneficiaries. The independent drugstore lobby agenda on DIR would increase costs and reduce access to affordable medicines for Medicare enrollees. Lower cost preferred pharmacy plans, which have been chosen by 75 percent of Part D enrollees, have become the very foundation of Medicare Part D. It makes little sense for lawmakers to put these popular plans at risk."

What drives the pharmacists crazy, however, is that often the fee imposed is unpredictable and seemingly arbitrary. In a survey of 640 pharmacists conducted by the group, two-thirds say that they receive no information about when the fee will be collected and how large it will be.

Eighty-seven percent of the surveyed pharmacists say that DIR fees significantly affected their ability to run a business and provide care to patients.

Pharmacy benefit management companies defend the DIR fees as pay-for-performance. High-performing pharmacies are assessed smaller fees. The fact that all pharmacies have to pay some sort of fee, however, undercuts the argument that it is incentive pay, argues the pharmacists association.

In addition, pharmacists say that pharmacy benefit managers make big money through “clawback fees,” a fee imposed on top of the patient’s copay that often leaves the patient paying more for a prescription than if the drug were purchased at cash price.

The pharmacist is obligated to collect the additional fee, which the pharmacy benefit manager later collects. Furthermore, pharmacy benefit managers often impose “gag clauses” that prohibit pharmacists from telling customers that the drug would be cheaper if purchased without insurance.

According to the survey, 83 percent of pharmacists have seen clawback fees occur at least 10 times in the last month. And many say they have seen the practice happen for both commercial plans and Medicare Part D plans.

"PBM corporations are inserting costs into the system on virtually everyone in order to fuel their profits and reward shareholders,” saysDouglas Hoey, CEO of the pharmacists association. “Government officials and health plan sponsors must insist on greater transparency and oversight of these practices to ensure that plan costs and premiums go to their intended purpose: taking care of patients.”

Instant Insights /

Pharmacists blame pharmacy benefit managers for driving up drug costs

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