On January 15, the National Community Pharmacists Association (NCPA) sued the U.S. Department of Health & Human Services (HHS), in the U.S. District Court for the District of Columbia, asking the Court to declare invalid and set aside a regulation and related rule and guidance language that NCPA claims improperly enables Part D plans and their PBMs to retain billions of dollars at the expense of patients and small business community pharmacies. At issue are direct and indirect remuneration (DIR) fees assessed against pharmacies, which NCPA claims average more than 1% of all prescription drug sales and more than 5% of gross pharmacy profits; and grew, according to CMS, by 45,000% between 2010 and 2017, and by 1,600% between 2013 – 2017, totaling $8.5B in those 5 years. (See page 15 of NCPA’s complaint and NCPA’s one-pager, and other contextual materials at https://ncpa.org/ncpa-v-azar). The relevant regulation requires exemption, from the calculation of negotiated prices, “those contingent price concessions that cannot reasonably be determined at the point of sale.” Even though DIR fees are often determined well after the point of sale, CMS’ policy is that they are not counted as part of price concessions in the calculation of negotiated prices.
NCPA’s basis for relief are that the: 1) regulation’s definition of “negotiated price” violates the plain language and intent of Congress when they passed legislation creating the Medicare Part D program; 2) rule is invalid as arbitrary and capricious; and 3) final rule was not adopted through proper notice and comment rulemaking. For the lawsuit to advance, NCPA will likely have to overcome a Statute of Limitations challenge. As for timing, NCPA’s outside counsel said during an NCPA webinar that she anticipated at least 1 to 1.5 years for the judge’s ruling, though the lawsuit could easily run longer. The independent pharmacy association also made it clear that it would continue to pursue favorable treatment on DIR issues at the Congressional and administrative/agency level.
AmerisourceBergen supports legislation and regulation that would reform retroactive DIR fees, as well as other post-adjudication recoupments, in conjunction with our pharmacy and dispensing provider customers in all pharmacy settings. Our internal pharmacy experts also helped craft the Phair Pricing Act from last Congress, which was incorporated into the Senate Finance Committee’s drug pricing package (which did not ultimately pass last Congress but may be revived this year) and led to similar helpful language in the proposed Medicare Part D rule but was not included in the 2019 final rule.