Protecting Pharmacies in Medicaid Act
Sponsored By: Senator Peter Welch
Introduced
Summary
This bill would require transparent pass-through pricing to stop pharmacy benefit manager (PBM) spread pricing. It would also create monthly NADAC surveys for retail pharmacies, separate surveys for non-retail types, and add new reporting, penalties, and funding to enforce those changes.
Show full summary
- Pharmacies: Retail community pharmacies would get monthly national average drug acquisition cost (NADAC) benchmarks and public data on response rates and price concessions. Applicable non-retail types such as mail-order and specialty pharmacies would be surveyed separately after 18 months.
- PBMs and managed-care entities: Contracts covering Medicaid drugs would have to pass ingredient cost plus a professional dispensing fee through to the dispensing pharmacy, report detailed cost and payment data by drug, ensure administrative payments reflect fair market value, and would be barred from using spread pricing to claim Federal Medicaid matching.
- Oversight and penalties: HHS’s Inspector General would study survey data and report to Congress, the Secretary must publish guidance identifying applicable non-retail pharmacies by January 1, 2027, and civil penalties for survey noncompliance could reach $100,000 per violation.
*This bill would increase federal spending with a $5.0 million appropriation in FY2026 and $9.0 million in each subsequent year.*
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Bill Overview
Analyzed Economic Effects
2 provisions identified: 0 benefits, 1 costs, 1 mixed.
Monthly pharmacy price surveys and fines
If enacted, HHS would run monthly surveys to set national average drug acquisition costs for retail and non‑retail pharmacies. Vendors would update HHS at least monthly and States would require any pharmacy receiving Medicaid‑related payments to answer survey requests. The government would publish monthly response rates, sampling details, and lists of noncompliant pharmacies. The Secretary could fine a pharmacy up to $100,000 for each violation for nonresponse or false reporting. The bill would appropriate $5 million to HHS OIG for NADAC studies for FY2026 and add $9 million for NADAC work for FY2026 and each year after. These rules would start the first day of the first quarter that begins six months after enactment.
Pass-through pricing rules for Medicaid drugs
If enacted, States would have to put pass‑through drug pricing into new Medicaid drug contracts starting 18 months after enactment. Payments would be limited to ingredient cost plus a professional dispensing fee at least as large as the State plan fee, and must generally be passed in full to the dispensing pharmacy. The bill would bar spread pricing from being used to claim federal Medicaid matching funds. PBMs and similar entities would have to give States and HHS drug‑level itemized cost and payment data. Administrative payments to PBMs would be limited to fair market value. For 340B purchases, paying above acquisition cost would be allowed only under a maximum‑price condition and with annual reporting by the covered entity.
Sponsors & CoSponsors
Sponsor
Peter Welch
VT • D
Cosponsors
Roger Marshall
KS • R
Sponsored 3/11/2025
Mark Warner
VA • D
Sponsored 3/11/2025
Bill Cassidy
LA • R
Sponsored 3/11/2025
Roll Call Votes
No roll call votes available for this bill.
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