Tester Pushes for Lower Prescription Drug Costs for Seniors, Support for Community Pharmacies

Bipartisan letter asks Office of Management and Budget to swiftly review Center for Medicare and Medicaid Services proposal to lower costs for older Montanans, support community pharmacies

As a part of his continued effort to lower prescription drug costs for Montana seniors and support community pharmacies, this month U.S. Senator Jon Tester led a bipartisan group of Senators in urging the Office of Management and Budget (OMB) to swiftly review the Centers for Medicare and Medicaid Services’ (CMS) proposed rule to lower out-of-pocket prescription drug costs for seniors by bringing so-called pharmacy direct and indirect remuneration (DIR) fees under control.

“Finalizing CMS’ DIR fee reform proposal will help save Medicare Part D beneficiaries more than $20 billion in prescription drug costs, while also providing increased transparency and predictability for pharmacies and the communities they serve,” wrote the Senators. “We urge you to move forward with review of this rule so that these important reforms can be implemented as quickly as possible.”

Under Medicare Part D, pharmacy middlemen known as Pharmacy Benefit Managers (PBMs) require additional payments from pharmacies after the drug is sold to the patient that changes the final cost of the drug. These are called DIR fees. In recent years, these middlemen have increasingly returned to pharmacies days or even months after the final sale to demand more in DIR fees. From 2010 to 2020, CMS documented a 107,400 percent increase in DIR fees paid by pharmacies.

Earlier this month, Tester led a bipartisan effort along with 29 Senators in requesting that the CMS finalize its proposed rule to stop all retroactive direct and indirect remuneration (DIR) fees. CMS’ proposed rule would improve price transparency and competition in the Medicare Part D program, thereby reducing out-of-pocket costs for Montanans. The rule would require Part D plans and their PBMs to apply all discounts they receive at the point of sale so that those paying for drugs at the pharmacy counter can benefit from those discounts. This policy is estimated to reduce prescription drug costs for Part D beneficiaries by $21.3 billion over the next 10 years.

Tester pushed hard for CMS to take administrative action after introducing bipartisan legislation last year to combat the high cost of prescription drug prices and the predatory practices of PBM). Tester’s legislation, the Pharmacy DIR Reform to Reduce Senior Drug Costs Act, would ensure that all DIR fees are made clear at the point of sale, eliminating the retroactive nature of DIR clawback fees.

The full text of the letter is available here.