Welch, Marshall, Warner and Cassidy Lead Bipartisan Bill to Crack Down on PBMs’ Abusive Pricing Practices

WASHINGTON, D.C. – U.S. Senator Peter Welch (D-Vt.) today led Senators Roger Marshall (R-Kan.), Mark Warner (D-Va.), and Bill Cassidy (R-La.) in introducing the bipartisan Protecting Pharmacies in Medicaid Act, legislation to limit abusive pricing practices by pharmacy benefit managers (PBMs). The Senators’ legislation cracks down on PBMs’ use of ‘spread pricing,’—charging Medicaid more than PBMs pay pharmacies for a drug—which drives up costs for Medicaid and short-changes pharmacies that are already struggling to stay in business. The bill would save Medicaid an estimated $2 billion over 10 years. 

“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.

“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.”
Spread pricing has been linked to the increasing failure rate for independent pharmacies, which are a critical source of health care and community for rural communities in Vermont, Kansas, and across the United States. Between 2018 and 2021, more pharmacies closed than opened in Vermont and across the country. In Vermont, 28 pharmacies have closed in the past five years, leaving only 126 pharmacies operating in the state. In 2022, 21% of Vermont’s census tracts were located in a “pharmacy desert,” an area with low access to a pharmacy, with most pharmacy deserts concentrated in rural areas. 

The Protecting Pharmacies in Medicaid Act will require Medicaid’s payments to PBMs to be passed directly to pharmacies, excluding administrative fees. The bill also requires all pharmacies participating in state Medicaid programs to report National Average Drug Acquisition Costs (NADAC) to increase transparency in drug pricing and ensure reimbursements to pharmacies reflect the true costs of prescription drugs.

The Protecting Pharmacies in Medicaid Act is endorsed by the Food Industry Association (FMI), National Association of Specialty Pharmacy, National Association of Chain Drug Stores, and the National Community Pharmacist Association.

“These are among the PBM reforms needed right away by Americans and their pharmacies. 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,” said Steven C. Anderson, President and CEO, National Association of Chain Drug Stores.

“Time and time again, PBMs have been caught using tactics like spread pricing to take advantage of the system, lining their pockets while harming patients and the taxpayers they are supposed to serve. Through spread pricing in Medicaid alone, PBMs can cost taxpayers hundreds of millions of dollars each year,” said B. Douglas Hoey, CEO, National Community Pharmacists Association. “These policies nearly made it through Congress at the end of last year. That is why we are grateful for Senators Peter Welch (D-VT), Roger Marshall (R-KS), Mark Warner (D-VA), and Bill Cassidy (R-LA) for introducing the Protecting Pharmacies in Medicaid Act, which not only promotes transparency and prohibits spread pricing, but it makes sure pharmacies are paid fairly, allowing them to continue serving their communities.”

Learn more about the Protecting Pharmacies in Medicaid Act.

Read the full text of the bill.