PBM Kickback Prohibition Act
- Bill Number
- H.R. 7895
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Health
- Status
- Introduced
- Latest Action
- 2026-07-02: Placed on the Union Calendar, Calendar No. 634.
- Last Updated
- 2026-07-09T23:23:24Z
AI-Generated Summary
Purpose The legislation aims to prohibit certain compensation arrangements, referred to as kickbacks, paid by pharmacy benefit managers (PBMs) in contracts with employee benefit plans governed by ERISA. It seeks to prevent payments tied to the referral or retention of plan business and related contracting activities.
Key Provisions
- Amends section 408(b)(2)(B) of ERISA (29 U.S.C. 1108(b)(2)(B)) by adding a new subclause (xi).
- Bars a covered service provider (PBM) from paying any direct or indirect compensation to any individual or entity for:
- Referral, recommendation, placement, retention, renewal, or access to a covered plan's business or that of a related health insurance issuer.
- Inclusion in, participation in, or design of requests for proposals, market checks, evaluations, volume/value/use of plan business, or any other contracting process.
- Requires that compensation be evaluated based on economic substance and practical operation, regardless of how it is labeled.
- Creates a presumption that payments to brokerage firms, brokers, consultants, advisors, or related entities are prohibited unless parties provide contemporaneous written documentation showing the compensation reflects fair market value for bona fide services and is unrelated to prohibited activities.
- Applies to plan years beginning after the date of enactment.
Significant Changes to Existing Law This bill expands ERISA's existing exemptions from prohibited transactions by adding targeted restrictions on PBM compensation practices. It introduces new documentation requirements and a presumption rule not previously present in section 408(b)(2)(B), shifting the burden to demonstrate that certain payments are legitimate.
Potential Impacts
- Government agencies: Increases oversight responsibilities for the Department of Labor in enforcing ERISA fiduciary and prohibited transaction rules related to PBM contracts.
- Citizens: May affect prescription drug pricing and plan costs for participants in ERISA-covered health plans by limiting certain intermediary payments.
- International relations: No direct effects identified in the legislation.
Main Stakeholders Affected
- Employee benefit plans and their sponsors (covered plans under ERISA).
- Pharmacy benefit managers and related service providers.
- Health insurance issuers offering coverage through these plans.
- Brokers, consultants, advisors, and other intermediaries receiving compensation from PBMs.
- Plan participants and beneficiaries who rely on prescription drug benefits.
Notable Legal, Constitutional, or Political Implications The amendment operates within ERISA's framework for fiduciary duties and exemptions from prohibited transactions, potentially strengthening protections against conflicts of interest without altering core constitutional authorities. It relies on a rebuttable presumption and documentation standards, which could lead to increased administrative and compliance burdens for parties involved in plan contracting.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Recent Actions
- 2026-07-02: Placed on the Union Calendar, Calendar No. 634.
- 2026-07-02: Reported (Amended) by the Committee on Education and Workforce. H. Rept. 119-729.
- 2026-07-02: Reported (Amended) by the Committee on Education and Workforce. H. Rept. 119-729.
- 2026-05-21: Ordered to be Reported (Amended) by the Yeas and Nays: 34 - 0.
- 2026-05-21: Committee Consideration and Mark-up Session Held
- 2026-03-12: Referred to the House Committee on Education and Workforce.
- 2026-03-12: Introduced in House
- 2026-03-12: Introduced in House
Bill Versions
- PBM Kickback Prohibition Act — issued 2026-03-12 — PDF (2 pages)
- PBM Kickback Prohibition Act — issued 2026-07-02 — PDF (6 pages)