Medicare enrollees, who have watched their out-of-pocket spending on prescription drugsclimb in recent years, might be in for a break.

Federal officials are exploring how beneficiaries could get ashare of certain behind-the-scenes fees and discounts negotiated byinsurers and pharmacy benefit managers, or PBMs, who together administerMedicare’s Part D drug program. Supporters saythis could help enrollees by reducing the price tag of theirprescription drugs and slow their approach to the coverage gap inthe Part D program.

The Centers for Medicare & Medicaid Services (CMS) coulddisclose the fees to the public and apply them to what enrolleespay for their drugs. However, there’s no guarantee that such anapproach would be included in a proposed rule change that couldland any day, according to several experts familiar with thediscussions.

“It’s obvious something has to be done about this. This iscausing higher drug prices for patients and taxpayers,” Rep. Earl“Buddy” Carter (R-Ga.), a pharmacist, said this week.

While Medicare itself cannot negotiate drug prices, the healthinsurers and PBMs have long been able to negotiate withmanufacturers who are willing to pay rebates and other discounts sotheir products win a good spot on a health plan’s list of approveddrugs.

Federal officials described these fees in a January fact sheet as direct and indirect remuneration, or DIRfees.

In recent years, pharmacies and specialty pharmacies have alsobegun paying fees to PBMs. These fees, which are different than therebates and discounts offered by manufacturers, can becontroversial, in part, because they are retroactive or “clawedback” from the pharmacies.

The controversy is also part of the reason advocates, such aspharmacy organizations, have lobbied for this kind of policychange.

PBMs have long contended that they help contain costs and areimproving drug availability rather than driving up prices.

Pressure has been building for the administration to takeaction. Earlier this year, the federal agency’s fact sheet set thestage for change, describing how the fees kept Medicare Part Dmonthly premiums lower but translated to higher out-of-pocketspending by enrollees and increased costs to the programoverall.

In early October, Carter led a group of more than 50 Housemembers in a letter urging Medicare to dedicate a share of the feesto reducing the price paid by Part D beneficiaries when they buy adrug. Also in the House, Rep. Morgan Griffith (R-Va.) introduceda related bill.

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Kaiser Health News (KHN) is a national health policynews service. It is an editorially independent program ofthe Henry J. Kaiser Family Foundation.

On the Senate side, Chuck Grassley (R-Iowa) and 10 othersenators sent a letter in July to CMS Administrator Seema Verma aswell as officials at the Department of Health and Human Servicesasking for more transparency in the fees — which could lead to adrop in soaring drug prices if patients get a share of theaction.

A response from Verma last month notes that the agency isanalyzing how altering DIR requirements would affect Part Dbeneficiary premiums — a key point that muted previous politicalconversations.

But advocates say the tone of discussions with the agency and onCapitol Hill have changed this year. That’s partly because Medicarebeneficiaries have become more vocal about their risingout-of-pocket costs, increasing scrutiny of these fees.

Ellen Miller, a 70-year-old Medicare enrollee in New York City’sborough of Queens, sent a letter to the Trump administrationdemanding lower drug prices. Miller’s prescription prices went upthis year, sending her into the Medicare “doughnut hole” by April,compared with October in 2016. With coverage, Miller pays about$200 a month for several prescriptions that help her cope withCOPD, or chronic obstructive pulmonary disease, as well as anotherchronic illness.

In the doughnut hole, where coverage drops until catastrophiccoverage kicks in, her out-of-pocket costs climb to $600 amonth.

It’s “ridiculous, and that doesn’t count my medical bills,”Miller said.

The number of Medicare Part D enrollees with high out-of-pocketcosts, like Miller, is on the rise. And in 2015, 3.6 millionMedicare Part D enrollees had drug spending above the program’scatastrophic threshold of $7,062, according to a report released this week by the Kaiser Family Foundation.(Kaiser Health News is an editorially independent program of thefoundation.)

Supporters of the rule change say making the fees moretransparent and applying them to what enrollees pay would providerelief for beneficiaries like Miller.

The Pharmaceutical Care Management Association (PCMA), whichrepresents the PBMs who negotiate the rebates and discounts, sayschanging the fees would endanger the Part D program.

“In Medicare Part D, you have one of the most successfulprograms in health care,” said Mark Merritt, president and chiefexecutive of PCMA. “Why anybody would choose to destabilize theprogram is beyond me.”

CMS declined to comment on a vague reference to a pending rulechange, which was posted in September.

For now, though, according to the CMS fact sheet, the fees posetwo compounding problems for seniors and the agency:

Enrollees pay more out-of-pocket for each drug, causing them toreach the program’s coverage gap quicker. In 2018, the so-calleddoughnut hole begins once an enrollee spends $3,750 out-of-pocketand ends at $5,000, and then catastrophic coverage begins.Medicare, thus taxpayers, pays more for each beneficiary. Onceenrollees reach the threshold for catastrophic coverage, Medicarepays the bulk cost of the drugs.

CVS Health, one of the nation’s top three PBMs, releaseda statement in February calling the fees part of apay-for-performance program that helps improve patient care. Thefees, CVS noted, are fully disclosed and help drive down how muchMedicare pays plans that help run the program.

“CVS Health is not profiting from this program,” the companynoted.

Express Scripts, also among the nation’s top three PBMs, agreedthat the fees lower costs and give incentives for the pharmacies todeliver quality care. As for criticism from the pharmacies,Jennifer Luddy, director of corporate communications for thecompany, said, “We’re not administering fees in a way thatpenalizes a pharmacy over something they cannot control.”

Regardless, even if a rule is changed or a law is passed, thereis some question as to how easily the fees can translate into lowercosts for seniors, in part because the negotiations are socomplicated.

When the Medicare Payment Advisory Commission, which providesguidance to Congress, discussed the negotiations in September,Commissioner Jack Hoadley thanked the presenters and said, “In myeyes, what you’ve revealed is a real maze of financial …entanglements.”

Tara O’Neill Hayes, deputy director of health care policy at theconservative American Action Forum, said passing on the discountsand fees to beneficiaries when they buy the drug could be difficultbecause costs crystallize only after a sale has occurred.

“They can’t be known,” said Hayes, who created an illustration of the negotiations.

“There’s money flowing many different ways between manydifferent stakeholders,” Hayes said.

Kaiser HealthNews (KHN) is a national health policy news service. It is aneditorially independent program of the Henry J. Kaiser FamilyFoundation. KHN’s coverage of prescription drugdevelopment, costs and pricing is supported in part bythe Laura and JohnArnold Foundation.