Alexandra Cohen, VP, Healthcare Product, OS Platform:
The recent $22 million win for New York Cancer & Blood Specialists against Caremark is shaking up the pharmacy industry. This ruling, which slams the entire concept of Direct and Indirect Remuneration (DIR) fees, could pave the way for more legal challenges against Pharmacy Benefit Managers (PBMs) like Caremark. With the Federal Trade Commission (FTC) hinting at future lawsuits and lawmakers, at both the state and federal level, turning up the heat, we might be on the brink of a major overhaul in how PBMs operate.
This landmark decision could provide a runway for further litigation, encouraging other providers to seek similar justice. For years, PBMs have skillfully dodged pharmacy pushback on egregious DIR fees, which were subjective, difficult to dispute, and continued to grow. In less than a decade, these fees escalated from 0.5% of drug sales to 3.7%. PBMs leaned on the Medicare rules that enabled these fees. But this ruling hits them where it hurts, questioning the fairness and validity of their bread and butter: DIR fees.
Now, while this is a big win for pharmacies, there are some broader implications we need to consider, especially for Medicare Part D. DIR fees have been a way to keep premiums lower for Medicare beneficiaries. Since the Centers for Medicare & Medicaid Services’ (CMS) final rule was enacted in January, clawbacks are a thing of the past, but the net impact on pharmacies before this ruling was a significant percentage of their revenue. If we do away with DIR fees, we might see higher premiums or reduced benefits for Medicare patients. So, any changes to DIR fee policies need to be thought through carefully to avoid hurting the very people they're meant to help.
What’s next? We could see new policies from the FTC, CMS, or other regulators putting tighter controls on PBMs. Legislative action might also come into play, addressing the wider impact on both providers and beneficiaries.
This ruling is a huge win for pharmacies, but it's just the beginning. We’re looking at the start of significant regulatory and legislative changes, a new chapter in the battle for fairness and transparency. Everyone involved needs to stay alert and proactive to make sure these changes end up benefiting all stakeholders in the healthcare value chain. Pharmacies do more than dispense medications; they’re crucial health touchpoints in our communities, providing vital services and support. We must ensure that they remain viable businesses.