S-3345 : Still Just a Bill

The "PBM Price Transparency and Accountability Act" aims to ensure accurate payments to pharmacies, prevent abusive spread pricing in Medicaid, and enhance pharmacy access, choice, and PBM accountability in Medicare. Key provisions of the Act include:

• Medicaid Reforms:
  • Accurate Pharmacy Payments:
    • Requires the Secretary of Health and Human Services (HHS) to conduct monthly surveys of retail and non-retail pharmacy drug prices to determine national average drug acquisition cost benchmarks (NADAC).
    • Mandates pharmacies to respond to these surveys and imposes civil money penalties (up to $100,000 per violation) for refusal, false information, or non-compliance.
    • Requires public disclosure of survey information, including response rates, sampling methodology, and available price concessions.
    • Prohibits using pricing data from non-retail pharmacies to inform payment methodologies for retail community pharmacies.
    • Directs the HHS Inspector General to periodically study survey data, especially concerning variations in acquisition costs and the influence of affiliated entities on reported costs.
  • Preventing Abusive Spread Pricing:
    • Requires contracts between States, managed care entities, or pharmacy benefit managers (PBMs) to utilize a transparent prescription drug pass-through pricing model.
    • Under this model, payments to pharmacies for covered outpatient drugs are limited to ingredient cost and a professional dispensing fee (not less than the State's direct payment), which must be passed through entirely (except for waste, fraud, or abuse reductions).
    • Administrative services by PBMs or entities must be compensated by an administrative fee reflecting fair market value.
    • Mandates PBMs and entities to make all costs and payments (ingredient, dispensing, administrative fees, post-sale adjustments, discounts, rebates, and other remuneration) related to covered outpatient drugs and services available to the State and Secretary.
    • Explicitly prohibits any form of "spread pricing"—where the amount charged or claimed by a PBM or entity exceeds the amount paid to pharmacies (after the administrative fee)—from being allowable for Federal matching payments.
    • Adds definitions for "applicable non-retail pharmacy," "affiliate," and "pharmacy benefit manager."
• Medicare Reforms:
  • Assuring Pharmacy Access and Choice:
    • Amends Medicare Part D to require prescription drug plan (PDP) sponsors to permit any pharmacy meeting "reasonable and relevant" contract terms to participate in their network, effective January 1, 2028. The Secretary of HHS will establish these standards.
    • Requires the Secretary to publish biennial reports on trends affecting "essential retail pharmacies" (non-affiliated pharmacies in underserved rural, suburban, or urban areas), including reimbursement, network participation, cost-sharing, and dispensing volume. PDP sponsors must submit lists of their affiliate pharmacies.
    • Establishes a process for pharmacies to submit allegations of violations of contract term standards and includes anti-retaliation and anti-coercion protections.
    • Grants the Secretary authority to impose civil monetary penalties or other sanctions for such violations.
    • Requires PBMs acting on behalf of PDP sponsors to reimburse sponsors for penalties incurred due to the PBM's delegated responsibilities.
  • Modernizing and Ensuring PBM Accountability:
    • For plan years beginning January 1, 2028, requires written agreements between PDP sponsors and PBMs (and their affiliates) to mandate:
      • No Income Other Than Bona Fide Service Fees: PBMs and affiliates may only derive remuneration from bona fide service fees (flat dollar amounts reflecting fair market value for actual services), with exceptions for manufacturer rebates/discounts fully passed through to PDP sponsors. The Secretary, in consultation with the OIG, will review remuneration for fair market value. PBMs must disgorge any remuneration obtained in violation.
      • Transparency Regarding Guarantees: PBMs must transparently define and apply terms for pricing guarantees and identify exclusions, providing wholesale acquisition cost-based equivalents for other benchmarks.
      • Annual Information Provision: PBMs must submit detailed annual reports to PDP sponsors and the Secretary, including drug-specific information on costs, claims, dispensing channels, enrollee out-of-pocket spending, rebates, other remuneration, and PBM/affiliate-retained revenue. These reports must also detail practices related to affiliate pharmacies, comparisons of brand vs. generic/biosimilar coverage, benefit designs encouraging affiliate use, and compensation to brokers/consultants.
      • Audit Rights: PDP sponsors have the right to annually audit PBMs for compliance and information accuracy, with PBMs obligated to provide all necessary records and data.
      • Written Explanation of Manufacturer Contracts: PBMs must provide explanations of contracts with manufacturers where rebates are contingent on formulary placement of other drugs.
    • Establishes enforcement mechanisms, including requiring PDP sponsors to disgorge PBM-disgorged amounts to the Secretary and imposing reimbursement requirements on PBMs for penalties.
    • Requires annual certification of compliance from PDP sponsors and establishes a confidential mechanism for reporting alleged violations.
    • Directs the Government Accountability Office (GAO) to study and report on price-related compensation structures across the retail prescription drug supply chain.
    • Requires the Medicare Payment Advisory Commission (MedPAC) to submit reports on PBM agreements and their effects on enrollee spending and pharmacy reimbursement.