What PBM reform proposals would change for pharmacies
Pharmacy benefit managers sit between drug manufacturers, health plans and pharmacies. Reform proposals target how PBMs are paid, how they reimburse pharmacies and what they must disclose. Here is what is already in force and what is only proposed.
The signal
PBMs manage prescription drug benefits for insurers, Medicare Part D plans and employers. Reform proposals target spread pricing, how PBMs are compensated and what they must disclose; for Part D pharmacies, price concessions have been applied at the point of sale since January 1, 2024.
Why this matters
PBM contract terms shape what pharmacies are paid, which pharmacies patients can use and what patients pay at the counter. Rules that change how PBMs operate — enacted or proposed — can change pharmacy cash flow and patient costs.
The 2-minute brief
PBMs run prescription drug benefits for plans and employers: they negotiate with manufacturers, set formularies, process claims and decide which pharmacies are in network and what they are paid. The FTC’s 2024 interim staff report examined how concentration and vertical integration among the largest PBMs affect access, prices and independent pharmacies.
One change for pharmacies is already in force: since January 1, 2024, Medicare Part D price concessions have been reflected at the point of sale. Other reforms — banning spread pricing, delinking PBM pay from drug prices, pass-through pricing in Medicaid and more transparency — have been proposed in bills in Congress, and many states have their own PBM laws.
What changed
- PBMs negotiate with drug manufacturers, design formularies, process prescription claims and assemble pharmacy networks on behalf of insurers, Medicare Part D plans, employers and other payers.[1]
- In July 2024 the Federal Trade Commission released an interim staff report from its study of the largest PBMs, describing how vertical integration and concentration can affect access to drugs, prices and independent pharmacies.[2]
- CMS redefined the Medicare Part D negotiated price as the lowest possible payment to a pharmacy, effective January 1, 2024, so pharmacy price concessions are reflected at the point of sale.[3]
- Spread pricing is the practice of a PBM charging a payer more than it reimburses the pharmacy and keeping the difference.[4]
- Bills introduced in Congress have proposed banning spread pricing, requiring pass-through pricing for PBMs that administer Medicaid drug benefits, delinking PBM compensation from drug prices and increasing transparency to plan sponsors.[4]
Who this affects
- Pharmacies
- Pharmacists
- Practice owners & operators
- Healthcare executives
What to watch next
The status of federal PBM legislation and of state PBM laws where you operate — a bill being introduced does not make it law.[4]
Further FTC actions arising from its study of PBM practices.[2]
Full analysis
What PBMs do
PBMs manage prescription drug benefits on behalf of insurers, Medicare Part D plans, employers and other payers. They negotiate with drug manufacturers, design formularies, process prescription claims and assemble pharmacy networks.
What has already changed
CMS’s final rule for contract year 2023 redefined the Part D negotiated price as the lowest possible payment to a pharmacy, effective January 1, 2024, so pharmacy price concessions are reflected when the claim is paid rather than later.
What has been proposed
Bills introduced in Congress have proposed banning spread pricing, requiring pass-through pricing for PBMs in Medicaid, delinking PBM compensation from drug prices and adding transparency requirements. Introduction does not mean enactment: check each proposal’s current status.
Where the federal scrutiny stands
The FTC’s interim staff report described how vertical integration and concentration among the largest PBMs can affect patients and independent pharmacies. Further agency action and state laws can change the rules that apply to a given contract.
NPHLA takeaway
Separate what is in force from what is proposed. Point-of-sale price concessions in Part D already apply; other reforms depend on legislation and rulemaking that are still moving. Review PBM contracts against the rules that actually apply in your state. General information, not legal or financial advice.
Source file
- [1]
- [2]
- [3]
- [4]
Drafted with AI assistance from the sources listed in the Source File, then reviewed and approved by an NPHLA editor before publication. NPHLA links to sources and does not republish their text. Professional information only — not medical, legal or regulatory advice for any individual situation. Our standards.