PBM limits could finally pass, if Congress moves its tax-cut bill

Modern Healthcare – Friday, May 16, 2025
By Michael McAuliff

Long-sought legislation to monitor and restrict how pharmacy benefit mangers operate could finally pass — if Republicans can move their sweeping budget bill that includes a string of those provisions.

New PBM measures are tucked into the bill advanced Wednesday by the House Energy and Commerce Committee, which aims to cut more than $880 billion in spending, including $625 billion from Medicaid. The restrictions have long been championed by Health Subcommittee Chair Buddy Carter (R-Ga.), who was a pharmacist before becoming a congressman.

“PBMs should not make more money by steering patients to use a higher cost drug, nor should they be under-reimbursing pharmacies below acquisition costs for their own benefit. House Republicans’ landmark reconciliation package contains necessary reforms to prevent these predatory practices so patients, not profits, are put first,” Carter said in an email to Modern Healthcare.

The proposed restrictions have mostly flown under the radar since they are relatively minor compared to the massive savings sought in the overall bill, and even some supporters are underwhelmed when considered in the context of cuts they oppose. The Medicaid PBM restrictions would save about $3 billion over 10 years, according to a preliminary estimate by the Congressional Budget Office. An estimate was not immediately available for the Medicare provisions.

The Medicaid provisions would set new compensation rules for PBMs and require greater levels of reporting. First, the bill would ban “spread pricing” where PBMs negotiate a better price for a drug and keeps some of the savings, instead of passing them along to pharmacies and beneficiaries. All savings would have to be passed through, and PBMs would have to charge administrative fees to earn money.

Second, drug retailers and some non-retail sellers would be required to participate in the National Average Drug Acquisition Cost survey. According to healthcare policy organization KFF, reporting is currently voluntary and prices can often be over-stated, causing the government to overpay. That survey would be made public, as well.

Medicare transparency requirements would also dramatically increase. Pharmacy benefit managers would have to provide detailed information to drug plan sponsors and the Health and Human Services Department about pricing and discounts, as well as details on how many and which drugs are dispensed.

PBMs’ compensation would have to be “delinked” from the savings they achieve in drug negotiations and be replaced by a set fee, called a “bona fide service fee.” The fees could include incentives for the drug price negotiators.

PBMs have long opposed such restrictions, saying they will reduce the incentive to strike tough deals, and limit the industry’s ability to get the best outcomes for clients. They say large drug companies with which PBMs negotiate would end up reaping the benefits.

Greg Lopes, a spokesman for the Pharmaceutical Care Management Association criticized both sets of provisions.

“Eliminating spread pricing in Medicaid reduces states and health plans’ options to contract with PBMs in ways that meet the health care needs of their enrollees,” Lopes said in a statement. “The delinking policy is windfall profit giveaway to Big Pharma on the backs of Medicare beneficiaries and taxpayers.”

While many smaller insurers, providers and their associations have sought such changes, the other provisions in the bill make them a thin silver lining that will not make up for other losses in the legislation.

“While we are pleased pharmacy benefit manager reforms are included to address waste in the drug supply chain, the overall draft legislation puts average Americans at risk,” the Alliance for Community Health Plans said in a news release. “ACHP remains concerned that millions of Americans will lose coverage.”

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