Rebates Raise Drug Costs 30 Percent

Direct and Indirect Remuneration Fees, yes, I know you’ve never heard of them and you’re saying, why should I be interested?

The simple reason is this – every time you get your prescription drugs filled at your local pharmacy, you’re paying far more than you should for your drugs and that adds up to hundreds of dollars every year and your pharmacy is having to pay for those drugs as well and BOTH of you have no say in the matter.

And who’s behind all of this? Pharmacy Benefit Managers (PBM’s), you’ll recall we discussed them is a previous article about who they are and what they do.

So, DIR Fees is just another way in which PBM’s are making billions of dollars each year out of you, the consumer, and businesses.

In fact, in 2019, PBM Rebates raised drug costs by almost 30% and brought in around $149 billion.

Doug Hoey is the CEO of the National Community Pharmacists Association and recently his organization launched a publicity campaign called ‘The Truth’ aimed at countering a big-money propaganda effort by the PBM lobby to obscure their role in the high price American’s pay for their drugs and the disappearance of neighborhood pharmacies.

“Pharmacy DIR Fees are where your local pharmacy has to pay a rebate to the PBM’s. Those rebates are also billions of dollars. Where it hurts the consumer, especially someone on Medicare with Part (D), they’re often paying a percentage of the cost of a drug. The consumer share is based on the price before the rebate from the drug manufacturers and the pharmacies rebates. So, if say their drug costs $100 and their share is 25%, they’re paying $25. But in reality after the drug and pharmacy rebates are applied that drug only costs $60, they should be paying 25% of $60, but they’re not, they’re still paying on the full $100 cost, because that’s not how PBM’s are calculating their costs.”

Hoey adds, “ And what this does, if you’re on Medicare, is that it pushes the consumer in to the catastrophic level sooner, which means the Federal Government then kicks in money to cover the consumer’s spending and that money comes from not only the Medicare recipient but every tax payer in America.”

Hoey acknowledges the way PBM’s go about their business of collecting these fees in such a complex and silent way through pharmacy and drug manufacturer contracts they’re effectively taking money from the consumer, without the consumers knowledge.

“Effectively yes! Both the manufacturer and the pharmacy are victims of this as well as they’re being asked to pay the rebate and the pharmacy has to collect the higher co-pay from the senior. So, a lot of the time it’s the pharmacy and the senior who’s saying why does this cost so much  and the pharmacy has to explain it, but they’re in this awkward position of taking this higher amount from the consumer and then later having to pay the PBM the higher rebate too.”

And it doesn’t end there for your pharmacy, as the PBM’s often collect money from them up to half a year later, based on what they call ‘quality measures’, which the PBM’s say are based on that individual pharmacies performance, however there are no ‘actual’ measurements supplied to the pharmacy, they’re often unknown, unpredictable, inconsistent and outside of the pharmacy’s control and if the pharmacy does dispute or challenge them, the PBM’s could strike a pharmacy off their preferred list meaning that pharmacy could lose business or over time, go out of business.

So, what can you do?

Hoey says, “People need to speak to their local State officials and say we need a better system and ask why is it that the United States is the ONLY country in the world that’s handed over the prescription drug benefits to PBM’s and the United States pay the highest drug prices in the world. That’s not a coincidence.”

So, we can continue to pay high costs for our drugs and continue to line the pockets of the PBM’s and their parent companies, or we can speak with local legislators, the office of the Healthcare Advocate in Connecticut and our State Attorney General’s office and demand they do something to actually protect the consumer and stop the continued abuse of our healthcare system.


Brian Scott-Smith is a local broadcaster and journalist with 20 years experience in the news, TV and Radio business and is the creator and host of the weekly news podcast, Connecticut East This Week, which looks at stories of interest to the communities of eastern Connecticut.

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