PBM Price Transparency and Accountability Act
- Sponsor
- Sen. Crapo, Mike [R-ID]
- Committees
- Finance Committee (primary)
- Last action
- Dec 4, 2025
Bottom line
The bill aims to reform PBM practices in federal health programs to ensure fairer pharmacy reimbursement, increase transparency in drug pricing, and potentially lower drug costs for patients.
What it actually does
This bill amends titles XVIII (Medicare) and XIX (Medicaid) of the Social Security Act to enhance transparency and accountability for Pharmacy Benefit Managers (PBMs). It expands drug acquisition cost surveys and prevents abusive spread pricing in Medicaid, while also ensuring pharmacy access and choice for Medicare beneficiaries and imposing new reporting and audit requirements on PBMs under Medicare Part D.
Proponents argue
Supporters argue that the bill will address the opaque practices of PBMs that drive up drug costs and squeeze independent pharmacies. They contend that increased transparency and direct accountability will lead to more accurate pharmacy payments, eliminate hidden fees, and ultimately result in lower prescription drug costs for beneficiaries and taxpayers.
Opponents contend
Critics, particularly PBM industry representatives, might argue that the bill could disrupt existing efficient drug supply chain models. They may contend that PBMs play a crucial role in negotiating lower drug prices and that excessive regulation could reduce their ability to secure discounts, potentially leading to higher costs for health plans and beneficiaries.
The bill is moderately complex due to its technical amendments to existing law, but a diligent reader can understand its core provisions within the time given.
Section 2(a)
Ensuring Accurate Payments to Pharmacies Under Medicaid
This provision expands the monthly survey of drug acquisition costs (NADAC) to include both retail community pharmacies and certain non-retail pharmacies (like mail-order and specialty pharmacies). It mandates that all pharmacies receiving Medicaid payments respond to these surveys and establishes civil money penalties for non-compliance or providing false information. Importantly, it prohibits states from using non-retail pharmacy pricing information to set payment rates for retail community pharmacies.
Supporters argue
Proponents argue that expanding NADAC surveys to non-retail pharmacies and ensuring all pharmacies comply will provide a more complete and accurate picture of drug acquisition costs. This data is essential for states to set fair reimbursement rates, preventing pharmacies from being underpaid and ensuring continued access to medications for Medicaid beneficiaries. The prohibition on using non-retail data for retail pharmacies protects community pharmacies from being unfairly benchmarked against different business models.
Critics contend
Some non-retail pharmacies might argue that the new survey requirements impose an undue administrative burden and that their acquisition costs and business models differ significantly from retail pharmacies, making direct comparison or inclusion in the same survey problematic. PBMs might also raise concerns about the increased scrutiny on their affiliated pharmacies.
Tradeoffs
The provision balances the need for comprehensive data to ensure fair payments with the administrative burden placed on pharmacies. It also addresses the tension between different pharmacy business models by preventing the use of non-retail data to inform retail pharmacy payments, acknowledging their distinct cost structures.
Section 2(b)
Preventing Abusive Spread Pricing in Medicaid
This provision mandates that contracts between states and PBMs or managed care entities in Medicaid must use a transparent prescription drug pass-through pricing model. This means payments to pharmacies must be limited to ingredient cost plus a professional dispensing fee (not less than the state's direct payment rate), and these payments must be passed through in their entirety. Any form of 'spread pricing' (where the PBM charges the state more than it pays the pharmacy, beyond an administrative fee) is disallowed for federal matching payments. PBMs must also disclose all costs and payments related to covered drugs and administrative services to the state and Secretary.
Section 3(a)(1)
Assuring Pharmacy Access and Choice for Medicare Beneficiaries ('Any Willing Pharmacy' Rule)
This provision amends Medicare Part D to strengthen the 'any willing pharmacy' rule. For plan years beginning January 1, 2028, PDP sponsors must permit any pharmacy meeting standard contract terms and conditions to participate in their network. The Secretary of Health and Human Services is mandated to establish standards for what constitutes 'reasonable and relevant' contract terms and conditions by April 2027, following a request for information by April 2026 to gather input on contracting practices, reimbursement, quality measures, and restrictions.
Section 3(b)(1)(A)
PBM No Income Other Than Bona Fide Service Fees (Medicare Part D)
This provision mandates that PBMs and their affiliates acting on behalf of PDP sponsors in Medicare Part D cannot derive any remuneration beyond 'bona fide service fees.' These fees must be flat dollar amounts, reflect fair market value for actual services, and not be contingent on drug price, discounts, or formulary placement. Manufacturer rebates and discounts are explicitly allowed if fully passed through to the PDP sponsor and compliant with existing direct and indirect remuneration (DIR) rules. PBMs must disgorge any non-compliant remuneration to the PDP sponsor, and the Secretary will review remuneration arrangements for fair market value.
Section 3(b)(1)(C)
PBM Information Provision and Transparency (Medicare Part D)
This provision requires PBMs to submit detailed annual reports to PDP sponsors and the Secretary, starting in 2028. These reports must include extensive information for each covered drug, such as brand/generic name, NDC, number of enrollees, claims data by dispensing channel (retail, mail, specialty), average wholesale acquisition cost (WAC), average wholesale price (AWP), total out-of-pocket spending, total rebates and other DIR, average pharmacy reimbursement, NADAC, and total manufacturer-derived revenue retained by the PBM/affiliate. If the PBM has an affiliate pharmacy, the report must also compare costs and dispensing volumes between affiliated and non-affiliated pharmacies. Additionally, PBMs must provide written explanations of contracts with manufacturers that link rebates to formulary placement of other drugs.
Defines 'applicable non-retail pharmacy' to include mail-order and specialty pharmacies, but explicitly excludes nursing home, long-term care, hospital, clinic, charitable, government, or low dispensing pharmacies. It also defines 'affiliate' as any entity owned by, controlled by, or related under common ownership with a PBM or managed care entity.
Section 2(a)(2) amending Section 1927(k) of the Social Security Act
Why it matters:This is standard legislative practice for defining terms that apply throughout a section. However, the specific exclusions and the broad definition of 'affiliate' are critical for understanding the scope of the new NADAC survey requirements and the anti-spread pricing rules.
Case for: Defining these terms clearly ensures that the new survey and transparency requirements are applied consistently and appropriately to the intended entities, while avoiding unintended burdens on other pharmacy types. The broad 'affiliate' definition is crucial for capturing vertically integrated PBMs and their related entities.
Case against: No specific opposition is typically raised against the act of defining terms, but PBMs with affiliated pharmacies might object to the broadness of the 'affiliate' definition due to the increased scrutiny it brings.
Estimated impact: Significantly broadens the scope of pharmacies subject to Medicaid drug acquisition cost surveys and clarifies which entities are subject to affiliate-related transparency rules.
Clarifies that rebates, discounts, and other price concessions received by a PBM or its affiliate from manufacturers are *not* considered a violation of the 'no income other than bona fide service fees' rule if they are fully passed through to a PDP sponsor and comply with all regulatory requirements related to direct and indirect remuneration (DIR) for manufacturer rebates.
Section 3(b)(1)(A)(iii)
Why it matters:This is a technical but highly significant detail that addresses how manufacturer rebates, a major component of PBM revenue, are treated under the new compensation rules. It's standard to include such clarifications within the operative language.
Case for: Proponents would argue this ensures that PBMs can continue to negotiate manufacturer rebates, which are a significant source of savings, as long as those savings are fully passed through to plans. This prevents unintended consequences of disincentivizing rebate negotiations.
Case against: Critics who advocate for even stricter PBM regulation might argue that this carve-out still leaves room for PBMs to manipulate rebate structures, even if passed through, and that a truly 'no income' model should be even more stringent.
Estimated impact: Preserves the mechanism for manufacturer rebates within the Part D program, but mandates full pass-through to plans, potentially impacting PBM revenue retention from these sources.
Includes 'Anti-retaliation and anti-coercion' clauses, stating that PDP sponsors shall not retaliate against a pharmacy for submitting allegations of contract violations, nor coerce, intimidate, threaten, or interfere with a pharmacy's ability to submit such allegations. A similar clause protects individuals or entities reporting alleged PBM violations.
Section 3(a)(3)(F)(i)(VIII) and Section 3(b)(2)(C)
Why it matters:These clauses are crucial for the practical effectiveness of the bill's transparency and enforcement provisions. Without them, pharmacies or other entities might fear reprisal for reporting violations. Their placement is typical for protective measures within enforcement frameworks.
Case for: Proponents argue that these provisions are essential to create a safe environment for pharmacies and other stakeholders to report violations without fear of retribution, thereby ensuring the new transparency and accountability measures can be effectively enforced.
Case against: No specific opposition is typically raised against anti-retaliation clauses, as they are generally considered good governance, though entities subject to reporting might find them an additional constraint.
Estimated impact: Enhances the enforceability and practical impact of the bill's transparency and accountability measures by protecting whistleblowers.