Understanding S3345: PBM Price Transparency and Accountability Act

The PBM Price Transparency and Accountability Act is designed to change how pharmacy benefit managers (PBMs) operate within Medicaid and Medicare Part D. One of the main changes is to stop a practice called "spread pricing." This is when PBMs charge health plans more for a drug than what they pay the pharmacy, keeping the difference as profit. The bill requires PBMs to use a transparent pricing model where they only charge the ingredient cost plus a fair dispensing fee. For Medicare Part D, the bill changes how PBMs are paid. Instead of tying their payment to drug prices or manufacturer rebates, PBMs would be reimbursed based on the National Average Drug Acquisition Cost (NADAC). This means that the focus shifts from high drug prices to actual costs, and any rebates must be shared directly with consumers at the point of sale, with the rest used to lower premiums. The bill also aims to make drug pricing more transparent. It requires regular updates and public disclosure of drug pricing data, including how prices are determined and any discounts or concessions. Additionally, it gives plan sponsors the right to audit PBMs to ensure compliance. Another important aspect of the bill is that it strengthens rules to ensure that any pharmacy willing to meet standard terms can participate in a health plan's network. This is particularly beneficial for independent and rural pharmacies, which often face exclusion from networks.

This bill could have a significant impact on the lives of millions of Americans, especially those who rely on Medicare and Medicaid for their prescription drugs. By ensuring that PBMs are more transparent and accountable, the bill aims to lower drug costs for consumers. This is particularly important for seniors and low-income families who often struggle with high out-of-pocket costs for medications. Independent and rural pharmacies stand to benefit as well, as the bill protects them from being unfairly excluded from pharmacy networks. This means that people living in rural areas will have better access to local pharmacies, which can be crucial for those who need regular medications. Overall, the bill aims to create a fairer and more transparent system for drug pricing, which could lead to lower costs and better access to medications for everyday Americans.

- Eliminates abusive spread pricing: Ensures that pharmacies receive the full cost of the drugs plus a fair fee, preventing PBMs from overcharging. - Delinks PBM pay from drug prices: Aligns PBM incentives with patient and plan interests, potentially lowering overall drug costs. - Boosts transparency and accountability: Requires PBMs to disclose fees and rebates, allowing for audits and exposing hidden practices. - Protects pharmacy access/choice: Enforces rules that include any willing pharmacy, benefiting rural and independent pharmacies. - Lowers costs for Medicare beneficiaries: Sharing rebates at the point of sale reduces out-of-pocket expenses for consumers.

- Potential administrative burdens: New reporting and audit requirements could increase administrative tasks for PBMs and plans. - Unintended reimbursement shifts: Changes in reimbursement models might lead to unforeseen financial impacts on pharmacies or plans. - Resistance from PBM industry: PBMs may oppose delinking compensation from drug prices, as it could affect their business models.