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Pharmacy Benefit Manager Back-end Fees Rise $13 Billion in 3 Years

Tony Hagen @oncobiz
Published: Thursday, Feb 02, 2017

Jeffrey Vacirca, MD

Jeffrey Vacirca, MD

A new trend in the way pharmacy benefit managers (PBMs) are collecting fees from pharmacy providers is driving up drug costs, gouging point-of-sale pharmacy operations, and playing havoc with spending at CMS, according to reports from CMS and the Community Oncology Alliance (COA).1,2

However, CMS, in its report, stated that DIR fees give only an artificial appearance of lower Part D costs. It said DIR fees force the government to pay out more in reinsurance costs for the final catastrophic phase of coverage under the Part D benefit. When these costs are added in, the total drug cost is much higher for CMS. For example, in 2010, the average Part D plan liability per beneficiary for CMS was roughly 0 and the reinsurance cost was about 0. In 2015, the plan liability per beneficiary was about 0—or 0 less than in 2010—and the reinsurance cost was 0—or 0 higher. Annual DIR fees have also risen sharply, actually outpacing the steady growth in Part D spending, COA and CMS noted in their reports. In 2010, DIR fees amounted to .7 billion of the net .8 billion Part D drug spend. In 2015, DIR fees were .6 billion and net drug costs were 3 billion. DIR fees related to the Part D program have more than doubled since 2012, when they stood at .5 billion.
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