Last night, CMS proposed new guidance to Part D plan sponsors regarding the reporting of manufacturer rebates known as Direct and Indirect Remuneration (DIR). The new guidance includes proposals that:
- Require plan sponsors to provide more detailed manufacturer rebate information so the accuracy of the data can be verified and guide better oversight of the Part D program.
- Require Part D sponsors to provide a description of administrative services for which they receive fees from a manufacturer
- Require reporting of global risk sharing arrangements with description
- Expand the reporting of rebates at the point of sale to include any price concessions
The new guidance follows a January 2017 report from CMS which highlighted their concerns about the growth of DIR fees and precedes what is likely to be a proposal to require rebates for Part D drugs at the point of sale.
The higher levels of DIR are a concern to the Trump White House which has continued the decades-old political tradition of making pharmaceutical prices an issue. The increasing disparity between gross and net prices does have some very real consequences:
- Higher point of sale prices translate into higher beneficiary cost sharing at the pharmacy register
- Higher point of sale prices translate into a faster progression to the catastrophic phase of Part D where Medicare assumes greater liability
However, CMS does acknowledge that DIR fees have the effect of lowering premiums for Part D beneficiaries. How much they lower premiums is anyone's guess, hence the increased reporting requirements proposed last night. The guidance document requires data on FY 2017 DIR be submitted during the regular reporting period that begins June 2, 2018, making it available to guide policy later this year.
The retrospective data collection means Part D sponsors will be reporting information they did not think they would have to submit. In our experience that set-up can yield some interesting results. We are especially interested in what it means to CVS whose PBM practices in general, and specifically in the Part D program, have raised some eyebrows.
Call with questions. Spring has finally sprung but we won't let that distract us.