PBM Act
- Sponsor
- Rep. Harshbarger, Diana [R-TN-1]
- Committees
- Judiciary Committee (primary)
- Last action
- May 13, 2026
Bottom line
The bill mandates the structural separation of pharmacy benefit managers and insurers from pharmacies to eliminate conflicts of interest, reduce drug costs, and enhance market competition.
What it actually does
This bill prohibits common ownership between pharmacy benefit managers (PBMs) or insurance companies and pharmacies, mandating divestiture within one year of enactment. It grants enforcement authority to the Federal Trade Commission (FTC), Department of Justice (DOJ), and state attorneys general, and establishes a private right of action for individuals harmed by violations. The bill aims to dismantle vertically integrated healthcare conglomerates to foster competition.
Proponents argue
Proponents argue that vertical integration in the pharmaceutical supply chain leads to anti-competitive practices, such as self-preferencing affiliated pharmacies, which drives up prescription drug costs for patients and health plans, harms independent pharmacies, and allows health conglomerates to evade profit limits like the Medical Loss Ratio. This bill directly addresses these issues by forcing structural separation.
Opponents contend
Opponents might argue that vertical integration creates efficiencies and cost savings through streamlined operations, better negotiation power with drug manufacturers, and improved patient care coordination. They may contend that forced divestiture would disrupt patient care, increase administrative burdens, eliminate these efficiencies, and ultimately raise costs rather than lower them, while also asserting that existing antitrust laws are sufficient.
The bill is concise and its core provisions are clearly stated, making it accessible for a quick but informed review by a reader wishing to understand its implications.
Section 3(a)(1)
Prohibition on Pharmacy Ownership by Entities Providing Insurance or Pharmacy Benefit Management Services
This provision makes it unlawful for any person or entity to directly or indirectly own, operate, or control both a pharmacy (including retail, mail-order, specialty, etc.) and an insurance company or a pharmacy benefit manager. This aims to break up vertically integrated healthcare conglomerates by preventing them from controlling both drug dispensing and drug benefit management/insurance.
Supporters argue
Supporters argue this structural separation is essential to eliminate inherent conflicts of interest where PBMs can steer patients to their own pharmacies, leading to higher costs, reduced choice, and unfair competition for independent pharmacies.
Critics contend
Critics might contend that such a drastic structural change would disrupt existing supply chains, eliminate efficiencies gained through integration, and potentially lead to higher administrative costs that could ultimately be passed on to consumers.
Tradeoffs
The provision balances the goal of fostering competition and reducing conflicts of interest against potential disruptions to existing business models and claims of efficiency gains from vertical integration.
Section 3(a)(2)
One-Year Divestment Deadline
Any person or entity found to be in violation of the common ownership prohibition established in Section 3(a)(1) must divest their pharmacy assets (or PBM/insurer assets) within one year of the bill's date of enactment. This sets a firm timeline for compliance.
Section 3(b)
Federal Trade Commission and Department of Justice Enforcement Authority and Penalties
This section grants both the Federal Trade Commission (FTC) and the Assistant Attorney General of the Antitrust Division joint or separate jurisdiction to enforce the common ownership prohibition. It specifies penalties for non-compliance with divestment milestones, including the monthly transfer of 10% of the person's profits into escrow and, if divestment doesn't occur by the deadline, the appointment of a divestiture trustee with authority to sell the pharmacy.
Section 3(c)
Civil Actions by Federal/State Agencies and Private Citizens
This provision allows the Inspector General of the Department of Health and Human Services (HHS), the Assistant Attorney General, the FTC, or state attorneys general to bring civil actions against violators of the common ownership prohibition. It also establishes a private right of action, enabling individuals alleging damages to sue for treble damages, reasonable attorney's fees, litigation costs, and other relief. Revenues disgorged from these actions are to be deposited into a fund created by the FTC for the benefit of harmed communities.
Section 3(d)
Enhanced Antitrust Review of Divestitures and Future Transactions
This section requires that any divestment of a pharmacy or pharmacy benefit manager mandated by the Act be reported to the FTC and DOJ under Section 7A of the Clayton Act, regardless of the usual monetary thresholds. It also mandates that the FTC and DOJ review the effect of each divestiture and any subsequent acquisition on competition, financial viability, and the public interest. Furthermore, it grants the FTC and DOJ authority to block any action that would harm competition by re-creating the conflicts of interest described in the bill.
The definition of 'pharmacy' is exceptionally broad, encompassing virtually all types of entities that dispense medications, including mail-order, specialty, retail, nursing home, long-term care, hospital, and infusion pharmacies. It also includes any organization with specific National Provider Identifier (NPI) taxonomy codes under the pharmacy section.
Section 3(i)(3)
Why it matters:While placing definitions at the end is standard legislative practice, the comprehensive nature of this definition is critical to the bill's scope and its ability to prevent loopholes, making it more consequential than a typical definition.
Case for: Supporters would argue that a broad and inclusive definition of 'pharmacy' is essential to prevent entities from reclassifying or structuring their operations to evade the divestment mandate, ensuring comprehensive application across the entire pharmaceutical dispensing landscape.
Case against: Critics might argue that such an expansive definition could inadvertently capture entities not primarily intended to be targeted by the bill's anti-monopoly aims, leading to unnecessary divestitures or operational complexities for diverse healthcare providers.
Estimated impact: Ensures comprehensive application of the prohibition across the entire spectrum of pharmaceutical dispensing, affecting all types of pharmacies currently owned by PBMs or insurers, thereby preventing circumvention of the core policy.
The definition of 'pharmacy benefit manager' is also very broad, covering any person, business, or entity that, directly or indirectly (including through an affiliate, subsidiary, or agent), negotiates prices/rebates, contracts with pharmacies to create networks, or manages/administers prescription drug benefits. This includes processing claims, utilization management, prior authorizations, and controlling drug costs.
Section 3(i)(4)
Why it matters:Similar to the 'pharmacy' definition, its placement is standard, but its comprehensive nature is key to preventing evasion by entities performing PBM functions under different labels or through complex corporate structures.
Case for: Proponents would argue that a wide-ranging definition of 'pharmacy benefit manager' is necessary to capture all entities performing core PBM functions, regardless of their self-identification or corporate structure, thereby preventing circumvention of the law's intent.
Case against: Opponents might argue that an overly broad definition could inadvertently include entities that perform minor PBM-like functions but are not central to the anti-competitive issues the bill targets, leading to unintended regulatory burdens or scope creep.
Estimated impact: Ensures that all core PBM functions, regardless of corporate structure or self-identification, are subject to the common ownership prohibition, impacting all major PBMs and their affiliates and preventing them from restructuring to avoid the mandate.