PBM Price Transparency and Accountability Act

Bill Number: S. 3345
Origin Chamber: Senate
Congress: 119th Congress, Session 1
Policy Area: Health
Status: Introduced
Latest Action: 2025-12-04: Read twice and referred to the Committee on Finance.
Last Updated: 2026-01-29T12:03:18Z

AI-Generated Summary

Purpose of the Legislation

The PBM Price Transparency and Accountability Act aims to increase transparency and accountability in pharmacy benefit manager (PBM) practices under Medicaid and Medicare programs. PBMs are companies that manage prescription drug benefits for health plans, negotiating prices and reimbursements with pharmacies and drug makers. The bill seeks to ensure fair payments to pharmacies, eliminate abusive pricing tactics like "spread pricing" (where PBMs charge plans more than they pay pharmacies and keep the difference), promote access to pharmacies for beneficiaries, and require detailed reporting to prevent conflicts of interest and overcharges.

Key Provisions

The bill is divided into two main sections addressing Medicaid (Title XIX) and Medicare (Title XVIII).

Medicaid Provisions (Section 2)

Accurate Payments to Pharmacies:
Requires the Secretary of Health and Human Services (HHS) to survey retail community pharmacies and certain non-retail pharmacies (e.g., mail-order or specialty pharmacies, excluding nursing homes or hospitals) monthly to establish national average drug acquisition cost benchmarks. These benchmarks reflect actual purchase prices, net of discounts and rebates.
States must use these benchmarks for reimbursing pharmacies under fee-for-service and managed care plans, including specifying dispensing fees (flat payments to cover pharmacy operational costs).
Pharmacies must respond to surveys or face civil money penalties up to $100,000 per violation; survey data will be publicly available, including response rates and pricing details.
Defines "applicable non-retail pharmacies" and "affiliates" (entities under common ownership with PBMs or managed care plans).
HHS Inspector General must study survey data for variations in costs, especially involving affiliates, with $5 million appropriated for this.
Preventing Abusive Spread Pricing:
Contracts between states, managed care entities, or PBMs must use a "pass-through pricing model," where payments to pharmacies cover only ingredient costs and a minimum dispensing fee, with any excess (like administrative fees) limited to fair market value and fully transparent.
Bans spread pricing for federal matching payments; requires detailed reporting of all costs, rebates, and fees to states and HHS.
For 340B drugs (discounted drugs for certain safety-net providers), allows payments above actual cost but requires annual reporting of excesses.
HHS must publish aggregated data on 340B payments annually.
Effective 18 months after enactment; $9 million annually appropriated starting in 2026.

Implementation is exempt from standard rulemaking and paperwork reduction requirements.

Medicare Provisions (Section 3)

Assuring Pharmacy Access and Choice:
Requires Prescription Drug Plan (PDP) sponsors to allow any willing pharmacy meeting standard terms to join their network starting in 2028; HHS must set "reasonable and relevant" contract standards by 2027, based on input from stakeholders.
Defines "essential retail pharmacies" as independent pharmacies in underserved areas (e.g., rural spots with no other pharmacy within 10 miles); requires biennial HHS reports on their reimbursement, participation, and cost-sharing trends through 2034.
Establishes a process for pharmacies to allege contract violations, with HHS investigations and penalties (up to civil money fines); bans retaliation against reporting pharmacies.
PBMs must reimburse PDP sponsors for penalties related to their actions.
Biennial HHS reports on enforcement; $188 million appropriated for 2026.
Modernizing PBM Accountability:
PDP contracts must require PBMs (and affiliates) to earn only "bona fide service fees" (flat, fair-market-value payments for actual services, not tied to drug volume or prices); prohibits other remuneration except passed-through rebates.
PBMs must transparently define terms like "rebate" or "specialty drug" and report annually on drug utilization, costs, rebates, out-of-pocket spending, and affiliate activities (e.g., percentages dispensed by affiliated pharmacies).
For brand-name drugs, requires justification if generics or biosimilars are less favorably covered.
PBMs must explain new contracts with drug makers that tie incentives to formulary placement.
PDP sponsors can audit PBMs yearly; must certify compliance annually.
Applies to Medicare Advantage-Prescription Drug (MA-PD) plans; confidential reporting mechanism for violations.
$113 million to HHS and $20 million to the Inspector General for 2026; GAO to study price-related compensation in the supply chain and report to Congress in 2 years; Medicare Payment Advisory Commission (MedPAC) to analyze PBM agreements.

Implementation exempt from certain administrative requirements; confidentiality protections for proprietary data.

Significant Changes to Existing Law

Medicaid: Expands the National Average Drug Acquisition Cost (NADAC) survey to include non-retail pharmacies and mandates its use in all reimbursement models, including managed care (previously optional). Introduces a nationwide ban on spread pricing in state contracts, with pass-through requirements and transparency rules not previously mandated federally.
Medicare: Shifts from voluntary "any willing provider" participation to mandatory network access with standardized terms; adds enforcement mechanisms like allegation processes and PBM liability for violations. Imposes new PBM reporting and fee restrictions, building on but exceeding existing transparency rules (e.g., Detailed DIR Reports for direct/indirect remuneration). Excludes price-based fees, promoting flat fees over percentage-based ones.

Effective dates vary: Medicaid surveys start 6 months post-enactment (18 months for non-retail); spread pricing ban and Medicare changes 18-24 months post-enactment, with full PDP/PBM rules by 2028.

Potential Impacts

Government Agencies: Increases HHS workload for surveys, guidance, enforcement, and reporting; provides new funding ($5M for Inspector General studies, $9M annual for surveys, $188M+$113M for Medicare). Could reduce federal Medicaid spending by curbing spread pricing overpayments; enhances oversight to detect fraud.
Citizens/Beneficiaries: Improves pharmacy access in underserved areas, potentially lowering out-of-pocket costs via better generic/biosimilar coverage and transparent pricing. May stabilize pharmacy networks, reducing closures, but could raise premiums if PBM fees increase.
International Relations: Minimal direct impact, though it may influence global drug pricing negotiations by emphasizing U.S. transparency in rebate and discount handling.

Main Stakeholders Affected

Pharmacies: Retail and independent pharmacies gain fairer reimbursements and network access; must comply with surveys and reporting.
PBMs: Face stricter fee limits, mandatory pass-throughs, audits, and disclosures, potentially reducing profits from spreads or affiliates.
Drug Manufacturers: Required to justify formulary preferences; rebates must be fully passed through, affecting negotiation leverage.
Medicare/Medicaid Beneficiaries: Over 80 million enrollees benefit from choice and cost controls.
States and Managed Care Plans: Must update contracts for pass-through pricing; gain tools for accurate reimbursements.
PDP/MA Sponsors: Increased accountability and reporting burdens, but potential savings from transparent PBM practices.
Wholesalers/Distributors: Impacted by affiliate studies and acquisition cost benchmarks.

Notable Legal, Constitutional, or Political Implications

Legal: Exempts implementation from Administrative Procedure Act rulemaking and Paperwork Reduction Act, allowing faster rollout but potentially limiting public input. Civil penalties draw from existing Medicare enforcement (e.g., section 1128A), ensuring due process. Anti-retaliation rules align with labor protections but apply to contracts.
Constitutional: No direct challenges foreseen; promotes equal access without infringing free speech or commerce, though PBMs might argue fee restrictions affect interstate business.
Political: Bipartisan support (introduced by Sens. Crapo, Wyden, et al.) reflects push for drug pricing reform amid rising costs. Could set precedent for broader PBM regulation in commercial insurance, influencing elections on healthcare affordability; empowers Inspector General and GAO for ongoing scrutiny without new agencies.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Sen. Crapo, Mike [R-ID]

Cosponsors (26)

Sen. Wyden, Ron [D-OR], Sen. Grassley, Chuck [R-IA], Sen. Bennet, Michael F. [D-CO], Sen. Cornyn, John [R-TX], Sen. Warner, Mark R. [D-VA], Sen. Thune, John [R-SD], Sen. Whitehouse, Sheldon [D-RI], Sen. Cassidy, Bill [R-LA], Sen. Hassan, Margaret Wood [D-NH], Sen. Lankford, James [R-OK], Sen. Cortez Masto, Catherine [D-NV], Sen. Daines, Steve [R-MT], Sen. Smith, Tina [D-MN], Sen. Barrasso, John [R-WY], Sen. Luján, Ben Ray [D-NM], Sen. Tillis, Thomas [R-NC], Sen. Warnock, Raphael G. [D-GA], Sen. Blackburn, Marsha [R-TN], Sen. Welch, Peter [D-VT], Sen. Marshall, Roger [R-KS], Sen. Scott, Tim [R-SC], Sen. Capito, Shelley Moore [R-WV], Sen. Blunt Rochester, Lisa [D-DE], Sen. Young, Todd [R-IN], Sen. Risch, James E. [R-ID], Sen. Heinrich, Martin [D-NM]

Recent Actions

2025-12-04: Read twice and referred to the Committee on Finance.
2025-12-04: Introduced in Senate

Bill Versions

PBM Price Transparency and Accountability Act — issued 2025-12-04 — PDF (79 pages)