339 Effect of the Medicare Part D DIR Fee Change on Part D Point-of-Sale Brand Name Prescription Reimbursement in a Community Pharmacy Setting

R. Qandil; S. Veach; J. Urmie

doi:10.1016/j.japh.2026.103353

Objectives Our primary objective was to study the effect of eliminating retroactive Medicare Part D DIR (direct and indirect remuneration) pharmacy fees on point-of-sale reimbursement for Medicare Part D brand name prescriptions. Our secondary objective was to explore the percent of brand name prescriptions with a negative gross margin over time and across payers. Beginning January 1, 2024, Medicare Part D plans were no longer allowed to use retroactive pharmacy DIR fees, meaning the lowest possible pharmacy reimbursement generally must be determined at the point of sale. This change was expected to lower point-of-sale reimbursement for brand name Part D prescriptions. In addition, anecdotal reports exist of pharmacies receiving below-cost payments and reduced reimbursement for brand name drugs in recent years, creating a critical need to examine changes in reimbursement for brand-name drugs. Methods Study Design and Participating Pharmacies The study employed a quasi-experimental pre-test, post-test with a non-randomized comparison group design. Our study group was Medicare Part D brand-name prescriptions, and our comparison group was other third-party brand name prescriptions. Our outcome variables were: (1) differences in mean brand name prescription gross margins (GMs) over time and across payers, and (2) differences in the percent of brand-name prescriptions with a negative GM over time and across payers. A convenience sample of 4 Iowa independently owned community pharmacies participated in the study. The study collected only de-identified, pre-existing records, so was deemed not Human Subjects research by the investigators’ Institutional Review Board. Data Collection Electronic dispensing records were collected from each pharmacy for prescriptions dispensed between January 1, 2023, and May 31, 2025. Each data file had patient and prescription identifiers removed before obtaining them from the pharmacy. Each file contained relevant data fields, including drug name, drug NDC, quantity dispensed, brand identified, date dispensed, third-party payer, reimbursed amount, amount paid by the patient, and pharmacy drug actual acquisition cost (AAC). To assess the accuracy of the AAC listed in the dispensing data, an audit of wholesaler invoice costs was done for a random sample of prescriptions. The AAC listed in the dispensing record was compared to the product’s AAC listed in the pharmacy’s wholesaler invoices, using the most recent date the product was purchased before the dispensing date. Data Analysis Dispensing records for OTC medications, generic prescriptions, vaccines, and durable medical equipment were removed from the data, leaving only records for prescriptions dispensed with a brand name drug product. Prescription GMs were calculated for each brand name prescription by subtracting the AAC from the Total Payment, which was the sum of the reimbursed amount from the third-party payer and amount paid by the patient. For all analyses, the pre-period = January 1 to December 31, 2023, and the post-period = January 1, 2024, to May 31, 2025. Description analyses included examining the percent change in mean GM for Medicare Part D and other third-party prescriptions from the pre-period to the post-period. The percentage of brand name prescriptions with a negative gross margin (GM < $0) was calculated for both Part D and other third-party brand name prescriptions in the pre and post-periods. A difference in differences analysis will be conducted to assess the change in brand name prescription mean gross margins before and after the Medicare Part D policy change on January 1, 2024. Part D prescriptions are the study group, and other third-party prescriptions are the non-randomized comparison group. We plan to conduct the analysis both for the full sample and for a market basket of commonly used brand name drugs. The market basket approach controls for changes in product mix and the full sample approach captures effects of both changes in product mix and changes in reimbursement rates. Outliers will be examined, and sensitivity analysis with and without outliers will be done. Results For our preliminary results we are reporting early descriptive results from the one pharmacy for which we are farthest along in terms of analyses and data cleaning. We are in the process of collecting, cleaning and analyzing data from the remaining pharmacies. Statistical analyses will be completed after we have the full prescription sample. From the one pharmacy, 10,814 brand name prescriptions were included, of which 4,405 were Medicare Part D brand name prescriptions, and 6,409 were other third-party payers brand name prescriptions. From the pre-period to the post-period there was a 47.2% decrease in the mean brand name prescription gross margin for Part D prescriptions. This was in contrast to the mean GM for other third-party payers which increased over the same time period. Prior to the change, the Medicare Part D mean GM was more than double the mean GM for other third-party payers, but in the post-period, it was 6.1% lower. The percent of Medicare Part D brand name prescriptions with negative GMs increased from 7.5% in the pre-period to 10% in the post-period. The percent of other third-party payers’ brand name prescriptions with negative gross margins increased from 2.8% in the pre-period to 14.7% in the post-period. Conclusions/Implications Our preliminary results show a large decrease in point-of-sale reimbursement for Medicare Part D brand name prescriptions after the DIR fees policy change in January 2024. An important limitation is that we could not capture the retroactive DIR fees that were collected from the pharmacy in the pre-period, so we were unable to draw conclusions about the effect of the DIR policy change on net pharmacy reimbursement. Brand name prescriptions from both Medicare Part D and other third party payers were more likely to have negative GMs in the post-period, which is a concerning trend. Statistical analysis of our full sample is needed to make more definitive conclusions about the impact of the Medicare Part D DIR fee policy change on independent pharmacies, and its implications for the future of brand-name prescriptions reimbursement.

339 Effect of the Medicare Part D DIR Fee Change on Part D Point-of-Sale Brand Name Prescription Reimbursement in a Community Pharmacy Setting

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