Pharmacists Fight Back in Medicare and Medicaid Act
- Sponsor
- Rep. Auchincloss, Jake [D-MA-4]
- Committees
- Ways and Means Committee (primary)
- Last action
- Dec 11, 2025
Bottom line
This bill aims to reduce prescription drug costs for patients and increase financial transparency and fairness for pharmacies by extensively regulating PBM practices in Medicare and Medicaid.
What it actually does
This bill establishes new requirements for Pharmacy Benefit Managers (PBMs) and prescription drug plans under Medicare Part D and Medicaid. It mandates specific pharmacy payment methods, requires PBMs to pass through manufacturer rebates to patients at the point of sale, prohibits "steering" patients to specific pharmacies, and increases transparency in drug acquisition costs across federal health programs.
Proponents argue
Supporters argue that PBMs currently operate with insufficient transparency, leading to inflated drug costs for patients and unfair reimbursement practices for independent pharmacies. This bill would ensure that rebates directly benefit patients at the point of sale, standardize pharmacy reimbursements, and prevent anti-competitive practices like steering, ultimately lowering out-of-pocket costs and supporting local pharmacies.
Opponents contend
Opponents might argue that these regulations could disrupt existing market efficiencies, increase administrative burdens for PBMs and plans, and potentially lead to higher premiums or reduced plan choices if PBMs are unable to negotiate favorable terms with manufacturers. They might also contend that PBMs play a crucial role in managing drug costs and that overly restrictive rules could undermine their ability to do so.
The bill is moderately complex due to its technical amendments to the Social Security Act, requiring careful reading to understand the full implications.
Section 2(a)(1), adding 1860D-12(h)(2) to the Social Security Act.
Standardized Pharmacy Reimbursement for Ingredient Cost and Dispensing Fees in Medicare Part D
This provision mandates that Medicare Part D plans and their PBMs reimburse in-network pharmacies for the ingredient cost of covered drugs based on the national average drug acquisition cost (NADAC) or wholesale acquisition cost (WAC), plus a fixed fee of 4% of NADAC/WAC or $50, whichever is less. Additionally, it requires payment of the state's Medicaid dispensing fee and prohibits PBMs from imposing fees that reduce this reimbursement.
Supporters argue
Supporters argue this provision ensures fair and transparent reimbursement for pharmacies, preventing PBMs from using opaque pricing models that often disadvantage smaller pharmacies and threaten their viability. It promotes competition and access to pharmacy services.
Critics contend
Opponents might argue that mandating specific reimbursement rates could increase overall drug costs for Medicare Part D plans, potentially leading to higher premiums for beneficiaries or increased federal spending. They may also contend it stifles market-based negotiations.
Tradeoffs
Balances pharmacy financial stability and market competition against potential increases in overall plan costs and reduced PBM negotiation flexibility.
Section 2(a)(1), adding 1860D-12(h)(3) to the Social Security Act.
Point-of-Sale Rebate Pass-Through Requirements for Medicare Part D
This provision requires Medicare Part D plans and their PBMs to apply manufacturer rebates at the point of sale, directly reducing the coinsurance or copayment owed by beneficiaries. For subsidy-eligible individuals, the PDP sponsor must remit the rebate amount (less the point-of-sale reduction) to the Secretary. PBMs are also required to remit rebates they receive to PDP sponsors.
Section 2(a)(1), adding 1860D-12(h)(1)(A)(iv) and 1860D-12(h)(5)(E) to the Social Security Act.
Prohibition on Pharmacy Steering in Medicare Part D
This provision explicitly prohibits Medicare Part D plans and their PBMs from "steering" beneficiaries to specific pharmacies, including affiliate pharmacies. Steering includes directing enrollees, offering plan designs that require specific pharmacies or increase costs for not using affiliates, promoting specific pharmacies, creating multiple pharmacy networks with preferential treatment, or influencing manufacturers to limit drug distribution.
Section 2(b)(1), adding 1927(e)(6) to the Social Security Act.
Medicaid PBM Payment, Rebate, and Anti-Steering Requirements
This provision extends similar requirements to Medicaid managed care entities and their PBMs. It prohibits steering, mandates pharmacy reimbursement based on NADAC/WAC plus a fixed fee and state dispensing fee, and requires PBMs to remit all manufacturer rebates or discounts to the State.
Section 2(c), amending 1128B and 1128A of the Social Security Act.
Criminal and Civil Penalties for PBM Non-Compliance
This provision establishes criminal and civil monetary penalties for PBMs that knowingly and willfully fail to comply with the new pharmacy payment requirements, engage in steering, or fail to comply with rebate pass-through requirements under Medicare Part D or Medicaid. Criminal penalties can include fines up to $1,000,000 and imprisonment up to 10 years, while civil penalties can be up to $1,000,000 for each act.
Section 3, amending 1927(f) of the Social Security Act.
Enhanced Medicaid Drug Acquisition Cost Transparency
This provision expands the types of pharmacies required to report drug acquisition costs for Medicaid, including mail-order, specialty, and hospital pharmacies, not just retail community pharmacies. It mandates that these pharmacies report their net acquisition price, inclusive of all price concessions. The Secretary is also required to make this information publicly available, including survey response rates and details on price concessions. It also prohibits states from using non-retail pharmacy pricing to set retail pharmacy reimbursement rates.
Defines "manufacturer rebate" broadly to include any price concession (including any payment, discount, administration fee, credit, incentive, or penalty) provided by the manufacturer or its affiliates to a PDP sponsor or PBM, including those based on aggregate volume or services provided to the manufacturer.
Section 2(a)(1), adding 1860D-12(h)(5)(B) to the Social Security Act.
Why it matters:Standard legislative practice to define terms comprehensively to ensure broad applicability of the main provisions, but its breadth is crucial for the effectiveness of the rebate pass-through.
Case for: Supporters argue this broad definition is essential to prevent PBMs and manufacturers from reclassifying rebates as other types of payments to circumvent the pass-through requirements. It closes potential loopholes.
Case against: Critics might argue that such a broad definition could inadvertently capture legitimate service fees or other payments that are not truly rebates, complicating PBM operations and potentially leading to disputes.
Estimated impact: Ensures that a wider range of financial incentives are subject to the rebate pass-through requirements, potentially increasing the total amount of savings passed to patients and states.
Provides a detailed, five-part definition of "steering," encompassing direct requirements, plan designs that increase costs for not using affiliate pharmacies, advertising, creating preferential networks, and influencing manufacturers to limit drug distribution.
Section 2(a)(1), adding 1860D-12(h)(5)(E) to the Social Security Act.
Why it matters:Standard legislative practice to define prohibited actions comprehensively, but the specific examples are critical to understanding the full scope of the ban.
Case for: Proponents argue that a detailed definition is necessary to prevent PBMs from finding new ways to circumvent the anti-steering provisions, ensuring robust protection for patient choice and pharmacy competition.
Case against: Opponents might argue that such a broad and detailed definition could be overly restrictive, hindering innovative plan designs or efficient network management by PBMs.
Estimated impact: Significantly broadens the scope of prohibited anti-competitive practices, aiming to ensure a truly level playing field for pharmacies and maximum choice for patients.