Justin Wilson, co-owner of Valu-Med Pharmacy in Midwest City, OK, is very concerned about the survival of his business. Like many other independent community pharmacies across the country, the impact of direct and indirect remuneration (DIR) fees—in addition to other financial pressures—may push Valu-Med over the edge.
So far in 2017, pharmacy benefit managers (PBMs) collected $24,000 in retroactive DIR fees from Valu-Med several months after patients had filled scripts. “We’ve hit the bottom on medication reimbursement. We are buying medication as low as we possibly can, and now we have these retrospective DIR fees to deal with,” Wilson said. “I’m not sure how we can keep the doors open unless something changes soon.”
Plus, DIR policies vary widely and the fees are unknown, so Valu-Med is unable to plan for its financial future, Wilson said. “Each PBM calculates these fees differently and collects them at different times of the year. We really have no idea how we will be reimbursed on prescriptions. We are in a kind of ‘wait and see when the dust settles’ type of business model.”
As a result, the pharmacy is unable to offer raises to employees and is “being forced to look at decreasing staff levels/hours to make our business model work,” Wilson said. “This ultimately decreases the quality of care we can provide for our patients.”
Valu-Med is not alone in the DIR fee battle. “Independent community pharmacists cited this as their number one priority for 2017 by far,” said B. Douglas Hoey, RPh, CEO of NCPA. “We’ve seen some former owners cite this specifically as a factor in their decision to close their community pharmacy practice.”
Pharmacy DIR fees are higher than in 2016, and pharmacists have lost some customers because of their insurance plans.
“We have had to reject several preferred network contracts due to how aggressive their terms/fees were. We would have been upside down on every prescription filled if we took those rates,” Wilson said, without listing which plans were rejected. “Other than that, we are still accepting most plans as we do not want to turn our backs on the patients who have been coming to my family’s pharmacy since 1977.”
For example, Aetna’s new policy essentially eliminated independent pharmacies from its preferred network because of pushback from pharmacies on DIR fees, according to NCPA. “Our members have potentially lost customers, since independents that were preferred are not in Aetna’s preferred network any longer,” Hoey said.
Up next: What's coming next for DIR fees