As you know, running an independent pharmacy means you’re running a small business. Apart from your healthcare and patient care expertise, you must have a business mind.
You have to cross your t’s and dot your i’s to ensure your independent pharmacy stays afloat. You’re likely no stranger to the frustrations of the business side of pharmacy.
Whether it’s inventory problems or the growing presence of pharmacy benefit managers, you likely have a strong opinion on the financial side.
Then we get to DIR fees. Just like PBMs, they are a divisive topic of discussion among fellow healthcare professionals. Though DIR fees are hardly anything new, it helps to get a refresher course every once in a while. Sometimes looking into the familiar can give us a fresh perspective.
Here’s what you need to know about DIR fees and their current role in the independent pharmacy industry.
What are DIR Fees?
Pharmacy Times defines DIR fees as the “fees that pharmacists may see PBMs charge outside of administration fees and are generally collected after the point of sale.”
They are an element of a pharmacy’s reimbursement when selling a prescription.
It is often performance-based, taking various elements of the prescription and the pharmacy itself into account: patient adherence, fill quotas, vaccine quotas, patient retention, and other performance measures.
In concept, DIR fees ensure that independent pharmacies get their fair share when filling a prescription — whether that’s when they first order the medication or when they finally sell the prescription.
DIR fees are also meant to encourage independent pharmacies to improve their work performances. A “better” independent pharmacy ideally gets lighter fees and others get penalized for lackluster performance.
However, as with many things in the pharmacy industry, it isn’t that simple.
What Makes DIRs Controversial
The concept of DIR fees sounds reasonable. It can also be conducive to a more financially competitive — and healthy — industry. However, the idea of labeling pharmacies as better or lackluster might sound a tad subjective. That’s because it is.
That subjectivity begins the slippery slope of DIR fees. They are inherently vague, unpredictable, and easily influenced by outside factors. PBMs stand at the forefront of the controversy.
PBMs are often able to influence patient formularies, making patients transfer their prescriptions to other pharmacies within their network. Such business practices shrink an independent pharmacy’s scope of care and jeopardize its financial solvency.
This prevents independent pharmacies from expanding their capabilities, stifling innovation and ways to care for their patients.
It can also affect your independent pharmacy’s inventory. The ongoing Ozempic shortage not only showed how quickly drug shortages can happen but also revealed how little pharmacies gain when ordering medications.
An NBC News article highlighted how independent pharmacies decided not to carry the blood sugar injection. They mentioned how the cost of acquiring the medication outweighed the profit due to PBM interference and DIR fees.
While independent pharmacies like Nate Hux, owner of Pickerington Pharmacy in Ohio, are cutting costs to make ends meet, their small businesses and respective communities ultimately suffer.
What is Being Done to Help Combat Bad Practices
Not everything is so doom and gloom. Though DIR fees are an obstacle within the pharmacy industry, various state and city governments are working to lessen their grip on the industry.
Pharmacists and healthcare professionals alike have coined the term “DIRpocalypse” to describe the current climate of DIR fees and for good reason.
The Centers for Medicare and Medicaid Services recently issued a final rule that prevents PBMs from applying retroactive DIR fees, starting January 1, 2024.
This will benefit both independent pharmacies and patients. For independent pharmacies, the elimination of retroactive fees increases predictability, giving them a much clearer picture of their finances.
That clarity will allow independent pharmacies to make informed decisions on the future of their small businesses. This will also give them the opportunity to innovate and expand their capabilities, such as providing more vaccines and clinical services.
While the final rule will undoubtedly help independent pharmacies, there is still a long way to go. While the final rule does eliminate retroactive fees, it doesn’t outright eliminate PBMs’ ability to issue DIR fees.
The issues surrounding DIR fees, therefore, remain. Still: progress is progress. And this is hopefully the first step to even more transparency and financial equity.
What You Can Do
While the “DIRpocalypse” is underway, ensure your independent pharmacy is operating with optimal efficiency.
All of these laws and regulations may be happening in government buildings and offices, but you can make a positive difference at your pharmacy counter.
Process all your patient’s prescriptions with the right third party, i.e. insurance program. This might sound self-explanatory but there are always exceptions to the rule.
Some patients prefer to use a discount card like GoodRx for prescriptions that are not covered by insurance. They may prefer a manufacturer that is out of network as well.
Much of the same rules apply to manufacturer coupons. Make sure their insurance and manufacturer coupons are on the same page for a smoother transaction.
It’s a small but essential step in the filling process, made easier by a superb pharmacy software system.
A minor slip-up can result in a delay in pharmacy workflow, especially during peak hours.
Things are looking up and up when it comes to DIR fees. The pharmacy industry lies squarely within the business world — and the only way to thrive in business is to make money.
That’s what the issues surrounding DIR fees are all about: ensuring that independent pharmacies get their fair share. Talk with fellow independent pharmacists about their experiences with PBMs and DIR fees.
It takes a village to truly make a difference.