By: Peter Matz, Director, Food & Health Policy, Food Marketing Institute

DIR PlayscreenImagine this scenario: A produce distributor buys apples from a farmer and then sells those apples to a grocery store for a certain price. The supermarket then sells the apples to customers based on the price it paid for the apples. However, weeks or months later, the same distributor can tell the grocery store that the price for the apples was actually higher than it originally thought and demand more money, which the supermarket is forced to pay. 

"That couldn’t happen," you scoff. Well, this analogy is meant to stretch your imagination, as it mimics an unfair reality for retail pharmacies across the country.

Drug middlemen, known as pharmacy benefit managers, use direct and indirect remuneration fees – or “DIR fees” – to bill pharmacies for additional charges retroactively, weeks or even months after prescriptions were purchased by patients.  Yes, it’s true: Pharmacies dispense medications and are reimbursed, only to have a portion of that reimbursement “clawed back” after the transaction in the form of DIR fees.  And, since there’s no way to anticipate these unfair fees, pharmacies often realize long after a prescription is filled that they didn’t even recoup their costs on the transaction.  As a result, pharmacies are struggling to stay in business.  Even worse, pharmacy DIR fees are part of the reason drug prices have skyrocketed, with patients facing higher out-of-pocket costs for needed medications. 

According to the federal government, DIR fees charged to pharmacies have grown by more than 45,000 percent over the past 10 years!  And, in an industry that operates on razor-thin profit margins, supermarket pharmacies have virtually no ability to absorb these unexpected costs.

Fortunately, bipartisan legislation has been introduced in Congress to prohibit retroactive pharmacy DIR fees. The Phair Pricing Act of 2019 (H.R. 1034/S.640) would require all pharmacy DIR fees and criteria for reimbursement to be determined at the point of sale, assuring that patients are properly charged and protecting pharmacies from the financial uncertainties they currently face.  Additionally, it would promote greater transparency and oversight of taxpayer dollars by ensuring drug middlemen disclose all pharmacy DIR fees to the federal government. It is common sense legislation that would benefit consumer wallets and pharmacies alike.

Make your voice heard.

 Urge Congress To Pass the Phair Pricing Drug Act

  • Government Relations
  • Pharmacy