November 2, 2023 - WASHINGTON – Sen. Chuck Grassley (R-Iowa) and Iowa pharmacies are urging the Centers for Medicare and Medicaid Services (CMS) to act ahead of financial burdens slated to hit rural drugstores on January 1, 2024. This looming problem was spurred by a regulatory change to direct and indirect remuneration (DIR) clawback fees, specifically Medicare Part D post-point-of-sale compensation. While the new policy is welcome in the long run, during the transition period, a combination of lower reimbursements and high clawbacks risks posing cash flow challenges for pharmacies.

Grassley is amplifying calls for CMS to work with pharmacy benefit managers (PBMs) – middlemen with significant and concentrated influence over the prescription medication market – to help rural drugstores to keep their doors open and continue serving patients: 

“Rural pharmacists in Iowa are considering closing or going without pay for some time, so that they keep their staff employed and the lights on. To protect seniors’ access to rural pharmacies, CMS must conduct robust oversight in the coming months and next year of Part D plans and their [PBMs],” Grassley wrote in his latest letter to Administrator Chiquita Brooks-LaSure. 

Grassley and Brooks-LaSure spoke about this issue over the phone in September. Among other assurances, the administrator said CMS would determine whether it could coordinate with PBMs on encouraging payment plans for rural pharmacies. Grassley is working to ensure the agency follows through on its commitments. 

“Iowa pharmacies are vital health care infrastructure, and many are in danger of closing due to pharmacy benefit managers and unreasonable, unacceptable Medicare Part D contracts. The Centers for Medicare and Medicaid Services (CMS) must quickly address these problems in a meaningful way to ensure the nation’s seniors have access to critical pharmacy services. IPA thanks Senator Grassley for urging CMS to act,” said Kate Gainer, PharmD, Executive Vice President & CEO, Iowa Pharmacy Association.

“Community pharmacies serve as the first stop for health care and sometimes serve as the only accessible health care provider for rural Iowans. Without immediate federal action and robust action-oriented oversight from the Centers for Medicare and Medicaid Services (CMS), the rapidly approaching DIR cliff along with insufficient reimbursement from PBM contracts will put seniors’ access to their local pharmacy at extreme risk in the next 3 to 6 months. I thank Senator Grassley for fighting for us in Washington to get the attention of CMS,” said Dr. Randy McDonough, Towncrest Pharmacies. 

“Senator Grassley has taken the time to truly understand the needs of Iowa (and all) pharmacies and we are grateful to have him as our advocate. The Centers for Medicare and Medicaid Services must do more to protect pharmacies during the DIR cliff and beyond. Help through the DIR cliff is only a band-aid until there is meaningful PBM reform legislation. We are facing an access to healthcare crisis, and it's unfortunate it takes a crisis to get attention. Every day I hear of another pharmacy closure. Put simply, we cannot be expected to operate at a loss!? Pharmacies are counting on federal action and oversight,” said Leslie Herron, RPh, Sumpter Pharmacy.

“I thank Senator Grassley for his attention to the needs of rural pharmacies and fighting for us at the federal level. The Centers for Medicare and Medicaid Services (CMS) cannot sit on the sidelines and let rural pharmacies continue to suffer. CMS has the tools to protect rural pharmacies during this DIR cliff,” said Pharmacist Jeff Olson, Montross Pharmacy.

"Iowa seniors depend on their local pharmacies, particularly in more rural parts of the state, to access vital medications, preventative medicine, and health care services in their community. Upcoming changes to pharmacy reimbursement under Medicare Part D will further strain these small businesses putting patient access at risk. I want to thank Senator Grassley and his staff for their tireless efforts in making rural practitioners feel heard and fighting to hold pharmacy benefit managers accountable. The Senator's work to advocate on the behalf of rural pharmacies to the Centers for Medicare and Medicaid Services, and ensure they are true to their commitments, will help ensure that community pharmacies are able to continue serving Iowa seniors,” said Dr. Andrew Spurgin, PharmD, Estherville Pharmacy.

In hearing from Iowa pharmacists, including at his 99 county meetings, Grassley is requesting CMS:

• Conduct oversight of Part D plans and their PBMs in the coming months and next year.  
• Encourage payment plans between PBMs and rural pharmacies. This would not impact PBM collections, but rather, it would give pharmacies additional time to make payments. 
• Consider establishing a direct line for rural pharmacies to report issues with DIR fee clawback changes. 
• Review Part D plan year 2024 contracts to ensure compliance with the availability, accessibility and acceptability of services, especially in rural and underserved areas. 

Read Grassley’s full letter to CMS HERE. 
Source: Senator Chuck Grassley