Citing the recent announcement by Bi-Mart that it’s begun closing 56 pharmacies in Oregon and the Northwest, U.S. Senator Ron Wyden this week urged the federal Centers for Medicare and Medicaid Services (CMS) to review pharmacy closures nationwide in the last five years with a focus on how fees imposed by Medicare Part D plans and middlemen known as pharmacy benefit managers are driving those closures -- many of which are in rural communities.
Wyden noted in his letter to CMS Administrator Chiquita Brooks-Lasure that Bi-Mart cited “increasing costs and ongoing reimbursement pressure” in its announcement of the pharmacies closing, 37 of which are in Oregon.
“I write with deep concerns about these closures, which reports indicate are caused by the negative financial impact of direct and indirect remuneration (DIR) fees imposed by Part D plans and pharmacy benefit managers (PBMs) on local pharmacies in Oregon and other states,” wrote Wyden, chair of the Senate Finance Committee. “Pharmacies across Oregon report that these fees exert significant financial strain and impede their ability to deliver critical services. These fees do nothing to lower the amount Medicare beneficiaries must pay for their drugs each time they fill a prescription and seemingly serve only to pad plan and PBM profits.”
He wrote that CMS reported in June to Congress that Part D plans and PBMs increased pharmacy DIR fees by an astounding 91,500 percent from 2010 to 2019, and that fees doubled from 2018 to 2020.
“I am deeply concerned that the rise of these fees has contributed to the permanent closure of 2,200 pharmacies nationwide between December 2017 and December 2020,” Wyden wrote. “Meanwhile, middlemen like Part D plans and PBMs continue to generate exceedingly high profits under the Medicare program—PBMs collectively generated annual revenue of $449 billion in 2020—using such forced post-point-of-sale price concessions and shifting costs onto beneficiaries and taxpayers.”
Wyden said these troubling trends raise alarm bells because mechanisms like pharmacy DIR fees can be deployed as anti-competitive tactics by PBMs to destabilize pharmacy revenue and subsequent closures serve to benefit pharmacies owned by plans and PBMs responsible for DIR fees by driving volume in their direction.
“Our rural communities are particularly dependent on local community pharmacists for their care, and are especially impacted by these closure,” he wrote. “Pharmacies not only provide access to medication in these communities, they also play an essential role in the provision of other critical services, such as patient education, management of chronic disease, preventative care, certain testing, and vaccine administration.”