Ensuring Accurate Payments to Specialty Pharmacies Act
- Sponsor
- Sen. Warner, Mark R. [D-VA]
- Committees
- Finance Committee (primary)
- Last action
- Sep 29, 2026
Bottom line
The bill seeks to increase transparency in drug pricing and ensure more accurate Medicaid reimbursement rates for non-retail pharmacies by requiring regular surveys of their drug acquisition costs.
What it actually does
This bill mandates the Secretary of Health and Human Services (HHS) to conduct monthly surveys of drug acquisition costs for non-retail pharmacies, including specialty and mail-order pharmacies, under the Medicaid program. It aims to establish national average drug acquisition cost benchmarks for these pharmacies, similar to existing surveys for retail pharmacies, and imposes penalties for non-compliance. The bill also provides funding for oversight by the HHS Inspector General and for the existing survey program.
Proponents argue
Proponents argue that this bill will bring much-needed transparency to the opaque drug pricing practices of non-retail pharmacies and Pharmacy Benefit Managers (PBMs), leading to more accurate and potentially lower drug costs for state Medicaid programs. They contend that current reimbursement models may overpay for drugs dispensed by these entities, and better data will ensure taxpayer dollars are spent more efficiently, ultimately benefiting patients and state budgets.
Opponents contend
Opponents, particularly some non-retail pharmacies and PBMs, may argue that the new survey requirements impose an undue administrative burden and could lead to reduced access to specialized medications if reimbursement rates are set too low. They might also contend that the complexity of their business models, including specialized handling and patient services, justifies different pricing structures that are not fully captured by simple acquisition cost surveys.
The bill is short and relatively straightforward, allowing an informed reader to understand its core provisions within the typical time allotted for legislative review.
Section 2(a), amending Section 1927(f) of the Social Security Act
Mandatory Surveys of Non-Retail Pharmacy Drug Prices
This provision requires the Secretary of HHS to conduct monthly surveys of drug prices specifically for 'applicable non-retail pharmacies' to determine national average drug acquisition cost benchmarks. These surveys will collect data on the actual costs pharmacies pay for drugs, net of all discounts and rebates, and can differentiate prices by various types of non-retail pharmacies. The goal is to ensure Medicaid payments reflect true acquisition costs.
Supporters argue
Supporters argue that these surveys are essential to bring transparency to a segment of the pharmacy market that currently lacks sufficient oversight regarding drug pricing for Medicaid. They believe this will lead to more accurate reimbursement rates, prevent overpayments, and ensure fair pricing for taxpayers.
Critics contend
Some non-retail pharmacies and PBMs may argue that the surveys impose an excessive administrative burden and that the collected data may not fully capture the unique costs associated with specialty drug dispensing, potentially leading to inadequate reimbursement and impacting patient access.
Tradeoffs
The provision balances the need for greater transparency and cost control in Medicaid drug spending against the administrative burden placed on non-retail pharmacies and the potential for unintended consequences on pharmacy operations and patient access if reimbursement rates are set too aggressively.
Section 2(a), amending Section 1927(f)(2)(C) and (D)
Data Differentiation and Mandatory Survey Response
This section requires the vendor conducting the surveys to differentiate data based on pharmacy type, including whether a pharmacy is affiliated with a Pharmacy Benefit Manager (PBM) and its specific non-retail pharmacy type. Furthermore, it mandates that all applicable non-retail pharmacies receiving any form of payment related to dispensing Medicaid drugs must respond to these surveys, regardless of whether the payment comes directly from the state or through a managed care entity or PBM.
Section 2(a), amending Section 1927(f)(2)(F) and (G)
Penalties for Non-Compliance and Data Use Limitation
This provision authorizes the Secretary of HHS, in consultation with the Inspector General, to establish civil monetary penalties for applicable non-retail pharmacies that fail to comply with the survey requirements. Crucially, it also includes a limitation: states are explicitly prohibited from using the pricing information collected from non-retail pharmacies to develop or inform reimbursement rates for retail community pharmacies.
Section 2(a), inserting new Section 1927(f)(5)
HHS Inspector General Oversight and Appropriation
This provision mandates the Inspector General (IG) of the Department of Health and Human Services to conduct periodic studies of the survey data. These studies will specifically examine substantial variations in acquisition costs, how internal transfer prices, and related party transactions (especially involving PBM-affiliated pharmacies) influence reported costs compared to non-affiliated pharmacies. The bill appropriates $5,000,000 for fiscal year 2027 to the IG to carry out this oversight, with funds remaining available until expended.
Section 2(b), amending Section 1927(k)
Definitions of 'Applicable Non-Retail Pharmacy' and 'Pharmacy Benefit Manager'
This section adds new definitions to the Social Security Act. An 'applicable non-retail pharmacy' is defined as a licensed pharmacy that is not a retail community pharmacy, specifically including mail-order and specialty pharmacies, while explicitly excluding various institutional or charitable pharmacies. The Secretary is required to publish guidance by January 1, 2028, to identify these pharmacies and establish type indicators. A 'pharmacy benefit manager' is broadly defined as any entity that acts as a price negotiator or manages prescription drug benefits for states or managed care entities, regardless of its self-designation.
The specific exclusions from the definition of 'applicable non-retail pharmacy' include nursing home pharmacies, long-term care facility pharmacies, hospital pharmacies, clinics, charitable or not-for-profit pharmacies, government pharmacies, or low dispensing pharmacies (as defined by the Secretary).
Section 2(b), amending Section 1927(k)(12)(A)
Why it matters:This is standard legislative practice to precisely define the scope of a term by listing both inclusions and exclusions, ensuring clarity for implementation.
Case for: Excluding these specific pharmacy types from the survey requirements prevents undue administrative burden on entities that may have different operational models or serve distinct patient populations, ensuring the surveys focus on the intended targets (specialty and mail-order).
Case against: No specific opposition is typically raised against these exclusions, as they are designed to narrow the scope appropriately. However, some might argue that excluding 'low dispensing pharmacies' could create a loophole if not carefully defined by the Secretary.
Estimated impact: These exclusions significantly narrow the universe of pharmacies subject to the new survey requirements, focusing the regulatory effort on specific segments of the non-retail market.
The amendments made by this Act take effect on the first day of the first quarter that begins on or after the date that is 18 months after the date of enactment of this Act.
Section 2(c)
Why it matters:This is standard legislative practice for effective dates, providing a reasonable transition period for agencies and affected entities to prepare for new requirements.
Case for: A delayed effective date provides HHS sufficient time to develop the necessary guidance, establish survey mechanisms, and contract vendors, and allows non-retail pharmacies time to prepare for new reporting obligations.
Case against: Critics seeking immediate transparency and cost savings might argue that an 18-month delay is too long, postponing the benefits of the bill.
Estimated impact: This provision delays the implementation and thus the potential fiscal impacts and transparency benefits of the bill by at least 18 months.
The bill appropriates $5,000,000 for fiscal year 2027 to the HHS Inspector General for oversight activities, to remain available until expended. It also appropriates an additional $9,000,000 for fiscal year 2027 and each fiscal year thereafter for the existing survey program (originally for retail pharmacies).
Section 2(a), inserting new Section 1927(f)(5)(B) and amending Section 1927(f)(6)
Why it matters:This is a common legislative technique to provide direct funding for new or expanded programs within the authorizing statute, ensuring the necessary resources are available for implementation.
Case for: Providing dedicated funding ensures that both the new non-retail pharmacy surveys and the critical oversight functions can be adequately resourced and sustained, without relying on uncertain future appropriations processes.
Case against: Some fiscal conservatives might argue against direct appropriations within authorizing language, preferring that all funding decisions go through the annual appropriations process for greater scrutiny.
Estimated impact: This provision commits $5 million for IG oversight in FY2027 and $9 million annually starting FY2027 for the broader survey program, representing a direct increase in federal spending.