OCPhA's Podcast on Pharmacy and Healthcare · OCPhA (Orange County Pharmacists Association)

24. DIR Fees, Clawbacks, and How To Take Action feat. Dr. Ken Thai

·18 min·1 clip

Dr. Ken Tai explains how DIR fees, meant to offset costs, have evolved into a major issue for pharmacies.

This episode examines DIR fees and clawbacks in pharmacy, featuring host Tony Dao and guest Dr. Ken Tai, the president of the California Pharmacists Association. Dr. Tai is also the president of 986 Degrees Corporation, a pharmacy franchise operating in multiple states. The conversation focuses on the financial pressures these practices place on independent pharmacies. DIR fees stand for direct and indirect remuneration fees, originating from Medicare Part D plans and Pharmacy Benefit Managers (PBMs). Dr. Tai explains these fees were initially intended to offset member costs but have since evolved significantly. The discussion details how PBMs retrospectively assess pharmacy performance using metrics like medication adherence. Pharmacies then face fee clawbacks based on this retroactive evaluation, which can occur long after a prescription is dispensed. A major issue is the unpredictability and size of these retroactive fees, which can amount to tens of thousands of dollars deducted from a pharmacy's reimbursement. Dr. Tai describes the operational nightmare of reconciling accounts and managing cash flow due to these unexpected charges. The episode highlights how these financial mechanisms can threaten the viability of independent pharmacy businesses. Dr. Tai argues the current system creates a significant disadvantage for pharmacies that lack the negotiating power of large chains. The conversation outlines specific actions pharmacists can take, including contacting their state legislators and federal representatives. Dr. Tai emphasizes the importance of sharing personal stories about how DIR fees impact local businesses and patient care. He notes that legislative efforts, like bills in California, are attempting to address these PBM practices. The tone is educational and advocacy-oriented, structured as an interview between a host and a knowledgeable industry leader. This episode is essential for independent pharmacy owners, managers, and students concerned with pharmacy economics and policy. Listeners seeking broad healthcare commentary without a focus on business operations might find it too niche.

Listen to the show on

Apple Podcasts Spotify

Play clips from this episode More from OCPhA's Podcast on Pharmacy and Healthcare