Following His Push, Brown Announces the Centers for Medicare and Medicaid Services will Act to Lower Medicare Part D Prescription Drug Costs for Older Ohioans

WASHINGTON, DC – U.S. Senator Sherrod Brown (D-OH) announced that the Centers for Medicare and Medicaid Services (CMS) heeded his call and issued a proposed rule to lower out-of-pocket prescription drug costs for seniors by bringing so-called pharmacy direct and indirect remuneration (DIR) fees under control.

Yesterday’s announcement from CMS follows a commitment Brown secured from CMS Administrator Chiquita Brooks-LaSure at the end of 2021 to take action on DIR fees and make it easier for community pharmacies to lower drug prices for Ohioans. These fees, which are often levied on community pharmacies retroactively by middlemen companies known as Pharmacy Benefit Managers (PBMs), increase the cost of prescription drugs for older Ohioans at the pharmacy counter and make it harder for local pharmacies in Ohio to serve their communities.

CMS’ proposed rule would improve price transparency and competition in the Medicare Part D program, thereby reducing out-of-pocket costs for the nearly 2 million Part D beneficiaries in Ohio. The rule would require Part D plans and their PBMs to apply all discounts they receive at the point of sale so that those paying for drugs at the pharmacy counter can benefit from those discounts. This policy is estimated to reduce prescription drug costs for Part D beneficiaries by $21.3 billion over the next 10 years.

“I’m encouraged that CMS, under the leadership of Administrator Brooks-LaSure, is following through on its commitment to lower drug prices for older Americans by issuing a rule to address fees levied on community pharmacies by these middlemen pharmacy benefit managers. When finalized, the CMS rule will help lower costs at the pharmacy counter for older Americans and empower more community pharmacies in Ohio to continue serving their communities,” said Brown. “This is an important step forward and I look forward to working with my colleagues and Administrator Brooks-LaSure to ensure this policy is finalized as quickly as possible to lower costs for older Ohioans.”

Brown has led efforts in the Senate to lower drug prices and increase transparency with pharmacy benefit managers and to support community pharmacies and the patients they serve. In some cases, fees from PBMs can be so high that small pharmacies can go out of business. A recent report shows that DIR fees total $11.2 billion a year – up from $200 million in 2013 – and, according to Ernest Boyd, the Executive Director of the Ohio Pharmacists Association, over the last two years, 250 independent pharmacies in Ohio have closed.

In October, Brown, alongside Senators Jon Tester (D-MT), Shelley Moore Capito (R-WV), and James Lankford (R-OK), sent a letter urging CMS to either work with Congress to eliminate DIR fees to help lower prescription drug prices for Medicare Part D beneficiaries or take administrative action to address the problem. CMS committed to taking action in its response to the Senators’ letter, and the proposed rule released on January 6, 2021 represents its formal proposal to address this issue.