WASHINGTON – U.S. Senators Bill Cassidy, M.D. (R-LA), Peter Welch (D-VT), Roger Marshall (R-KS), and Mark Warner (D-VA) introduced the Protecting Pharmacies in Medicaid Act to put an end to harmful pricing schemes used by pharmacy benefit managers (PBMs). The bill targets ‘spread pricing,’ a practice where PBMs overcharge Medicaid while underpaying pharmacies, ultimately driving up costs and putting independent pharmacies at risk of closing. This legislation is expected to save Medicaid $2 billion over the next decade.
“My goal as a doctor in the exam room was to provide the best care at the most affordable price for the patient. The same principle should apply to Medicaid,” said Dr. Cassidy. “Taxpayers should not be cheated by those looking to take advantage of Medicaid.”
“Pharmacies are essential to the care and wellbeing of our rural communities. But spread pricing by pharmacy benefit managers is making it harder than ever for community pharmacies to stay in business and lining the pockets of middlemen,” said Senator Welch. “This bill takes an important step to limit PBMs’ abusive pricing practices, protect our pharmacies, and support our rural communities. I’m grateful to have Senators Marshall, Warner, and Cassidy’s partnership on this bipartisan legislation to protect the health of Vermonters and Americans across the country.”
“Pharmaceutical industry middlemen use a variety of tricks to line their own pockets at the expense of small, independent pharmacies and senior citizens,” said Senator Marshall.“Prohibiting PBM spread pricing will cut costs for prescription drugs relied upon by Medicaid enrollees while simultaneously preserving access to local pharmacies that have financially struggled in recent years due to PBMs cutting them out of their share of payments. I’m grateful to partner with Senator Welch on this important legislation that is pro-consumer, pro-small business, and pro-taxpayer.”
“Independent pharmacies deliver critical health care, including providing life-saving prescriptions, to patients all across the Commonwealth. Unfortunately, for too long, PBMs have engaged in shady tactics to line their own pockets at the expense of these small businesses and sick seniors. That’s why I’m proud to introduce the Protecting Pharmacies in Medicaid Act, legislation that will put an end to the abusive practice of spread pricing and bring down costs for patients and our local pharmacies,” said Senator Warner.
The spread pricing model has contributed to the decline of independent pharmacies, which serve as a vital resource for rural communities. From 2018 to 2021, more pharmacies shuttered than opened nationwide, leaving millions with fewer options for accessing their medications. In Louisiana, where more than a quarter of residents live in rural areas, these closures hit especially hard.
Under the Protecting Pharmacies in Medicaid Act, PBMs would be required to pass Medicaid payments directly to pharmacies instead of skimming off the top. It also requires pharmacies participating in state Medicaid programs to report National Average Drug Acquisition Costs (NADAC) to improve transparency in drug pricing and ensure fair reimbursement.
The bill is endorsed by the Food Industry Association (FMI), National Community Pharmacists Association, and the National Association of Chain Drug Stores.
“These are among the PBM reforms needed right away by Americans and their pharmacies,”said Steven C. Anderson, President and CEO of the National Association of Chain Drug Stores. “These also are among the reforms backed overwhelmingly in the Congress on a bipartisan basis. Every day that PBM reform is delayed is another day that Americans pay inflated drug prices, that care gets more remote for people and for communities, and that pharmacies are forced out of business. NACDS thanks Senators Peter Welch, Roger Marshall, Mark Warner, and Bill Cassidy and the cosponsors for their continued leadership, and urges swift action by the Congress to right these wrongs of the middlemen’s pharmaceutical benefit manipulation,”
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