Pharmacists Fight Back [in Federal Employee Health Benefit Plans Act]
- Sponsor
- Rep. Auchincloss, Jake [D-MA-4]
- Committees
- Oversight and Government Reform Committee (primary)
- Last action
- Jul 22, 2026
Bottom line
The bill aims to increase transparency and fairness in prescription drug pricing and reimbursement within the FEHB program by directly regulating PBM practices and imposing penalties for non-compliance.
What it actually does
This bill amends federal law to regulate Pharmacy Benefit Managers (PBMs) operating within the Federal Employee Health Benefits (FEHB) program. It mandates specific reimbursement rates for in-network pharmacies, requires PBMs to pass through manufacturer rebates to consumers at the point of sale, and prohibits PBMs from engaging in practices that steer patients to specific pharmacies or restrict pharmacy networks. The bill also establishes civil monetary penalties and debarment for PBMs and, in some cases, carriers, that violate these new requirements.
Proponents argue
Proponents argue that the bill will lower out-of-pocket prescription drug costs for federal employees by ensuring rebates are applied at the point of sale. They also contend it will promote fair competition and financial stability for independent pharmacies by establishing transparent and adequate reimbursement rates, preventing PBMs from engaging in anti-competitive practices like patient steering or network restrictions.
Opponents contend
Opponents, particularly PBM industry groups, typically argue that such regulations interfere with market-based negotiations, which they claim already drive down drug costs for payers and patients. They may contend that these measures could increase administrative burdens, reduce PBMs' ability to negotiate effectively with manufacturers, and ultimately lead to higher overall healthcare costs or reduced choice for consumers.
The bill is relatively short but contains technical language regarding PBM operations and federal health benefits law, requiring careful reading for full comprehension.
Section 2(a), amending 5 U.S.C. 8904(c)(1)(A)
Pharmacy Reimbursement and Rebate Pass-Through Requirements
This provision requires health plans under the FEHB program to ensure their PBMs reimburse in-network pharmacies for prescription drugs based on the national average drug acquisition cost (NADAC) plus a professional dispensing fee. It also mandates that PBMs apply manufacturer rebates at the point of sale to reduce the individual's copayment or coinsurance, calculating it based on the net cost of the drug, and remit the remaining rebate amount to the health plan carrier.
Supporters argue
Supporters argue this provision ensures greater transparency in drug pricing, directly benefits consumers by lowering their immediate costs, and provides fair compensation to pharmacies, preventing PBMs from profiting excessively from spread pricing and rebate retention.
Critics contend
Critics, particularly PBMs, might argue that mandating specific reimbursement formulas and rebate pass-throughs interferes with their ability to negotiate competitive prices, potentially leading to higher overall costs for health plans or reduced innovation in PBM services.
Tradeoffs
The provision balances the desire for lower consumer costs and fair pharmacy reimbursement against the potential for reduced PBM negotiating leverage and changes to existing PBM business models.
Section 2(a), amending 5 U.S.C. 8904(c)(1)(B)
Prohibition on Anti-Competitive PBM Practices
This section prohibits PBMs and their affiliates from directing or requiring individuals to use specific pharmacies, advertising one pharmacy over another, or creating networks that exclude or restrict in-network pharmacies. It also prevents PBMs from influencing manufacturers to limit drug distribution to a small number of pharmacies or non-affiliate pharmacies, and from charging individuals for dispensing fees already paid to pharmacies.
Section 2(b), inserting new 5 U.S.C. 8902b(a)
Civil Monetary Penalties for PBM Violations
This provision establishes a system of civil monetary penalties for PBMs that violate the new requirements. OPM can impose a $10,000 penalty per violation on a PBM. If a PBM incurs five or more penalties with respect to a single carrier within a 10-year period, the carrier also faces a $10,000 penalty. There are caps on total penalties for PBMs ($100,000 per carrier per 10 years) and carriers ($50,000 per 10 years).
Section 2(b), inserting new 5 U.S.C. 8902b(b)
Debarment of Non-Compliant PBMs
This provision mandates that OPM debar a PBM from administering prescription drug benefits for FEHB plans if that PBM accumulates 10 or more civil monetary penalties within any 10-year period. Debarment becomes effective 90 days after the tenth penalty, and no payments can be made to a debarred PBM for services during the debarment period. Debarment can be terminated if all penalties leading to it are overturned on appeal.
The specific formula for ingredient cost reimbursement to in-network pharmacies is defined as the sum of the national average drug acquisition cost (NADAC) for the drug on the day of claim adjudication (or wholesale acquisition cost if NADAC is unavailable) AND the lesser of 4 percent of that amount or $50.
Section 2(a), amending 5 U.S.C. 8904(c)(1)(A)(i)
Why it matters:This level of detail is typical for legislative text that aims to be precise about financial mechanisms, rather than being an attempt to obscure the provision.
Case for: Supporters would argue that this precise formula ensures fair and transparent reimbursement for pharmacies, preventing PBMs from arbitrarily setting low rates that could harm pharmacy viability.
Case against: PBMs might argue that such a rigid formula removes flexibility in negotiations and could lead to higher overall drug costs if it doesn't account for market dynamics or volume discounts.
Estimated impact: This provision directly impacts the financial margins of thousands of in-network pharmacies and the cost structure for PBMs within the FEHB program.
The definition of 'affiliate' is broad, including any entity that directly or indirectly owns, is owned by, or is controlled by a pharmacy benefits manager, or is a subsidiary of an entity that owns or controls a PBM. This ensures that the prohibitions on steering and network restrictions apply comprehensively to PBMs' entire corporate structures.
Section 2(a), amending 5 U.S.C. 8904(c)(2)(A)
Why it matters:This is standard legislative practice to ensure clarity and scope of terms used throughout the bill, rather than an attempt to hide its implications.
Case for: Proponents would argue that a broad definition of 'affiliate' is essential to prevent PBMs from circumventing the anti-steering and anti-restriction provisions by using related entities.
Case against: PBMs might argue that such a broad definition could inadvertently restrict legitimate business practices or create unnecessary compliance burdens for diverse corporate structures.
Estimated impact: This definition ensures the anti-competitive provisions apply to a wider range of PBM-related businesses, impacting their operational strategies.
For the purpose of imposing sequential civil monetary penalties (e.g., reaching the 5-penalty threshold for carrier penalties or the 10-penalty threshold for debarment), any civil monetary penalties concurrently imposed under the bill are deemed to be imposed sequentially.
Section 2(b), inserting new 5 U.S.C. 8902b(a)(4)
Why it matters:This is a technical legal clarification to ensure the penalty thresholds are applied consistently, regardless of whether multiple violations are identified and penalized simultaneously.
Case for: Supporters would argue this ensures the penalty system is robust and cannot be sidestepped by PBMs or carriers through the timing of OPM's enforcement actions.
Case against: Critics might argue that this provision could lead to a faster accumulation of penalties than intended, potentially triggering debarment or carrier penalties more quickly.
Estimated impact: This technicality ensures the thresholds for escalating penalties and debarment are met more reliably, strengthening the enforcement mechanism.