Bill
S 3345
The act mandates pass-through pricing for PBMs and requires comprehensive price transparency and enforcement to curb abusive pricing and improve drug access and accuracy of Medicai
What this bill is about
- Bipartisan Senate bill S.3345 (119th Congress) aims to reform how pharmacy benefits managers (PBMs) operate within Medicaid and Medicare programs.
- Primary goals: ensure accurate Medicaid pharmacy payments, end abusive spread pricing, improve pharmacy access and choice for Medicare beneficiaries, and strengthen PBM accountability under Medicare.
Main purpose and intent
- Improve price transparency and data reporting for prescription drugs.
- Prevent abusive pricing practices (notably spread pricing) that obscure the true cost of drugs and inflate government spending.
- Enhance oversight and accountability of PBMs, ensuring they operate with fair value and in the interest of beneficiaries and taxpayers.
- Expand pharmacy participation and fair contracting in Medicare plan networks to preserve beneficiary access and choice.
Key provisions and changes
A. Medicaid: accurate payments and ending abusive spread pricing
- Reforms to determine Drug Acquisition Costs:
- The Secretary of Health and Human Services (HHS) would establish national average drug acquisition cost benchmarks using monthly surveys of retail and non-retail pharmacies.
- The Secretary may contract vendors to collect retail and non-retail price data, including how discounts, rebates, and other price concessions affect costs.
- Survey reporting and transparency:
- States must require retail and applicable non-retail pharmacies receiving any price concessions to participate in these surveys.
- Data collected must be publicly available in a form determined by the Secretary, including methodology, response rates, and concessions (to the extent allowed by privacy and security).
- Penalties for non-compliance:
- Civil monetary penalties up to $100,000 per violation for pharmacies that fail to respond, provide false information, or otherwise fail to comply.
- Definitions and scope:
- Introduces and defines “applicable non-retail pharmacy” (includes mail-order and specialty, but excludes nursing homes, long-term care, hospitals, clinics, etc.).
- Clarifies the term “affiliate” in relation to PBMs and related entities.
- Oversight and funding:
- Creates an Inspector General oversight program to periodically study survey data variations and related-party transactions, with appropriations to support this activity.
- Establishes a biennial report on enforcement and oversight actions.
B. Medicaid: preventing abusive pricing methodologies
- Transparent pass-through pricing model for contracts with PBMs and managed care entities:
- Any payment for drugs and related services must be pass-through to pharmacies, limited to ingredient cost plus a professional dispensing fee, with no extra, hidden margins.
- Pass-through must be complete except for certain allowed deductions or adjustments required by law.
- Federal regulations (e.g., 42 CFR) should apply to ensure transparency, with some allowances for certain circumstances (e.g., 340B-related scenarios).
- Public reporting:
- Information on negotiated prices, concessions, and other remuneration must be published annually by state and by category of entity (including 340B-affiliated entities and other PBM structures).
- Data handling and enforcement:
- PBMs must provide detailed cost breakdowns to the Secretary and be subject to audits and penalties for noncompliance.
- Expanded definitions:
- Strengthens definitions for “affiliate” and “pharmacy benefit manager” to capture a broader set of entities involved in pricing and administration.
C. Medicare: pharmacy access, PBM accountability, and plan involvement
- Essential pharmacy access for Medicare beneficiaries:
- Medicare Prescription Drug Plan (PDP) sponsors must allow any willing pharmacy that meets reasonable contract terms to participate in their networks.
- Starting plan years 2028, PDPs must offer terms that meet Secretary-established standards for reasonableness and relevance.
- By 2027, the Secretary must solicit information on pricing, network practices, audit practices, and other contracting details to guide standard-setting.
- Essential Retail Pharmacies:
- The bill introduces an “Essential Retail Pharmacy” designation and requires biannual or periodic reporting on their costs, participation, and cost-sharing trends.
- The Secretary would publish a list of essential retail pharmacies per plan year and require PDP sponsors and MA organizations to report related data (affiliates, network participation, incentive payments, etc.).
- Data transparency and reporting requirements:
- PDP sponsors must provide annual disclosures to CMS, including rebates, DIRs, and other remuneration.
- Requires PDP sponsors to report on network design, incentive payments, and affiliate relationships; includes detailed annual reporting templates and formats.
- Accountability and enforcement:
- PDP sponsors and PBMs would be subject to penalties for violations of reasonable contract terms and conditions.
- Provisions for audits, dispute resolution, and anti-retaliation protections for pharmacies submitting concerns or allegations.
- Insurance of PBM accountability in MA–PD:
- Similar accountability provisions apply to MA–PD plans (Medicare Advantage with Prescription Drug coverage).
D. Administrative and implementation details
- Effective dates:
- Medicaid price survey and related provisions: phased in, with retail phar macy survey requirements applying earlier; non-retail pharamcies phased in 18 months after enactment.
- Medicare provisions: standards for contract terms apply to plan years beginning after January 1, 2028; other related requirements staggered with earlier milestones for data collection and publication.
- Implementation authority:
- HHS Secretary may implement amendments by program instructions or other administrative means; some provisions exempt from standard APA procedures.
- Confidentiality and data handling:
- Survey data and PBM reports receive confidentiality protections; disclosures limited to certain oversight bodies (GAO, CBO, Medicare Payment Advisory Commission, Attorney General) and subject to safeguards to prevent disclosure of trade secrets or identifying information.
Who would be affected
- States implementing Medicaid price surveys and reporting requirements.
- Retail and applicable non-retail pharmacies (including mail-order and specialty pharmacies) that participate in Medicaid and Medicare drug dispensing and pricing data collection.
- Pharmacy Benefit Managers (PBMs) and their affiliates, including those servicing PDP sponsors and MA–PD plans.
- States, managed care entities, and plan sponsors that contract with PBMs or other entities for drug coverage and administration.
- Medicare beneficiaries enrolled in PDPs and MA–PD plans, with potential changes in pharmacy network access, dispensation, and cost-sharing transparency.
- Federal agencies (HHS/CMS) responsible for implementing, reporting, auditing, and enforcing these provisions.
Significant procedural or timeline aspects
- Public reporting and data collection are phased in, with staggered implementation:
- Retail pharmacy pricing data: earlier implementation date.
- Non-retail pharmacy data: effective after 18 months from enactment.
- Essential retail pharmacy listings and reporting: plan year 2028 onward; data collection begins earlier to establish baselines.
- Standards and guidance:
- Secretary to establish standards for “reasonable and relevant” PDP contract terms by early 2027, with input gathered via a 2026 request for information.
- Oversight funding:
- Generous appropriations for CMS and related offices to support inspections, audits, and enforcement activities, including annual and biennial reporting obligations.
- Data formats:
- Standard machine-readable formats for annual PBM reporting to be established by June 1, 2027.
Bottom line
- The PBM Price Transparency and Accountability Act envisions comprehensive price transparency, tighter control of PBM practices, and stronger protections to ensure accurate Medicaid payments and fair Medicare drug pricing and access. It emphasizes pass-through pricing, detailed data reporting, robust enforcement, and enhanced oversight to curb abusive pricing and increase beneficiary access and plan transparency.
Compiled from official sources — confirm details with the bill’s official record.
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