COVID-19 Shines a Spotlight on the Importance of Preserving Local Pharmacies

By: Peter Matz, Director, Food & Nutrition Policy, FMI

Over the past 15 months since the COVID-19 pandemic became a national emergency, pharmacies across the country have played a vital role supporting the health and well-being of Americans in the face of the rapidly spreading SARS-CoV-2. In addition to ramping up COVID-19 testing in local communities around the country and providing medicines to treat those who are infected, pharmacies stepped up quickly to inoculate their communities against the virus, delivering over 80 million vaccine doses in the last five months.

What’s more, the pandemic has made Americans much more aware of their own health needs. According to FMI’s recent report, The Power of Health and Well-Being in the Food Industry 2021, 49% of shoppers are putting more effort into selecting nutritious and healthy options due to the pandemic. The report also shows that 45% of consumers believe their supermarket pharmacist is on their side when it comes to helping them stay healthy, reinforcing the fact that pharmacists are among the most trusted health care providers.

Beyond their own personal health, the pandemic has also highlighted for many Americans the importance of ensuring access to quality healthcare for disadvantaged communities. The U.S. Centers for Disease Control and Prevention notes that people of color have been at a much higher risk of severe COVID-19 infection and death, partly due to a lack of access to quality health care. Local pharmacies can serve as a critical gateway for these individuals to receive the services they need to maintain their health amid COVID-19 and beyond.

Despite their essential role in serving communities, pharmacies nationwide continue to be threatened by hidden “clawback” fees charged by drug middlemen that are both shuttering pharmacies and costing patients more at the pharmacy counter. These payments, known as Direct and Indirect Remuneration (DIR), were designed to be applied at the point-of-sale to reduce the cost of prescription drugs for Medicare beneficiaries. However, a vast majority of DIR fees are clawed back from pharmacies by pharmacy benefit managers (PBMs) long after a drug has been dispensed, and the DIR fees collected by PBMs are never used to reimburse or otherwise reduce the cost of a drug. Additionally, given how unpredictable and arbitrary DIR fees are, it’s impossible for pharmacies to anticipate these fees. As a result, pharmacies frequently lose money on prescription drug transactions, causing an alarming number of pharmacies to shut their doors in recent years.

According to the U.S. Centers for Medicare & Medicaid Services, pharmacy DIR fees have grown by 91,500% between 2010 and 2019! It’s no wonder there were 2,200 pharmacy closures in 2019 alone, leading to significantly reduced access for consumers and an increase in “pharmacy deserts” where patients have to travel more than a mile from their home to fill prescriptions and receive other healthcare services that pharmacies offer.

The Pharmacy DIR Reform to Reduce Senior Drug Costs Act has been introduced in both the U.S. House of Representatives (H.R. 3554) and U.S. Senate (S. 1909) to stop the predatory practice of imposing fees on pharmacies long after the point of sale while charging Medicare beneficiaries more up front for their drugs. This important legislation would reduce patients’ cost sharing, prevent retroactive DIR clawbacks, enhance price transparency and cost predictability, and establish clear performance measures for pharmacies.

FMI was pleased to join allied pharmacy trade associations last week at a well-known, independent pharmacy on Capitol Hill to highlight a grassroots letter signed by 249 organizations representing pharmacies and patients alike in support of this crucial DIR reform bill. Representatives from each association spoke on the need for action and then hand-delivered the letter to the lead bill sponsors in the U.S. House of Representatives, Reps. Peter Welch (D-VT) and Morgan Griffith (R-VA).

Action must be taken to control consumers’ drug costs and stem the tide of pharmacy closures around the country at a time when Americans need reliable access to pharmacies more than ever. Make your voice heard by urging your elected officials to support and advance the Pharmacy DIR Reform to Reduce Senior Drug Costs Act!