Sending Office: Honorable Earl L. “Buddy” Carter
Sent By:

Dear Colleague:

The Medicare Part D program has been a resounding success, providing critical access to life-saving medicines at an affordable cost.  However, now 11 years after its launch,
it is clear that there are actions CMS could take to ensure that our seniors benefit from price concessions when they receive their prescriptions at the pharmacy counter. One particular situation has led to significant market inefficiency: the growth and extent
of Part D sponsors’ direct-and-indirect remunerations (DIR). In January, CMS rang the alarm bells on the dramatic increase in DIR fees, which have tripled in the past five years.

These fees have no basis in law—at best, DIR fees serve as an inappropriate measure of quality; at worst, they inflate beneficiary out-of-pocket costs as well as total federal
outlays as seniors progress unnecessarily rapidly through the ‘donut hole’ and into catastrophic coverage.  The sickest patients with the highest drug costs are, in effect, subsidizing everyone else because rebates negotiated on their behalf are not passed
on to the beneficiary at the point-of-sale.

In addition, the DIR fees extracted from pharmacies are often based on inapplicable measures and have grown to a degree that pharmacies’ ability to participate in the Part
D program is becoming threatened.

Please join me in urging Secretary Price to utilize his existing authority to ensure that Medicare Part D plan sponsors dedicate a meaningful share of negotiated rebates, discounts,
and other fees to reduce Part D patients’ out-of-pocket costs for covered medicines at the point-of-sale and ensure access to our pharmacies.

Please contact my staff for additional information or to sign-on:



August XX, 2017


The Honorable Tom Price


United States Department of Health and Human Services

200 Independence Avenue, SW

Washington, DC 20201

Re: Ensuring Rebates and Discounts in Medicare Part D Help Reduce Patient OOP Costs

Dear Secretary Price:

We are writing to urge the Department of Health and Human Services (HHS) to work within its existing authority to ensure that Medicare Part D plan sponsors dedicate a meaningful
share of negotiated rebates, discounts, and other fees to reduce Part D patients’ out-of-pocket costs for covered medicines at the point-of-sale.

Under the Social Security Act, the Secretary has “authority to negotiate the terms and conditions of the proposed bid submitted and other terms and conditions of a proposed
[Part D] plan.”[1] The Act also requires plan sponsors to “provide enrollees with access to negotiated prices” that “take into account … discounts, direct or indirect subsidies, rebates, and direct or indirect remunerations, for covered part D drugs,
and include dispensing fees for such drugs.”[2]Agency action under this authority need not violate the statute’s non-interference clause, a vital protection for beneficiaries and instrumental to sustaining a competitive market.[3]

Earlier this year a Centers for Medicare & Medicaid Services (CMS) Fact Sheet indicated the discounts and rebates that reduce ingredient and dispensing costs for Part D plan
sponsors (known as direct and indirect remuneration or DIR) have nearly tripled since 2010.[4]The Medicare Trustees and outside analysts like IMS Health have had similar findings.[5]At the same time, however, we understand that common
practices by pharmacy benefit managers (PBMs) and plan sponsors do not use DIR to reduce beneficiaries’ medicine costs at the pharmacy counter and actually leads to negative reimbursement for the pharmacy. Such practices also may increase government costs
in some cases. We also urge CMS to ensure patient access to specialty pharmacies is not limited by the use of inapplicable Star Rating measures.   

Thank you for considering this important issue. Medicare Part D has achieved impressive results since enactment under Republican leadership in 2003. That success derives from
private sector competition, negotiation, and consumer choice, as opposed to heavy-handed regulation or a government-sponsored plan. We are now in the program’s second decade, and together we face the challenge of defending Part D’s effective, unique, market-based
structure while addressing developments that may jeopardize future success. We look forward to working with the administration on behalf of Part D patients and pharmacists.


Earl L. “Buddy” Carter

Member of Congress