Congress·In Committee·S. 927

Sen. Welch and Bipartisan Group Introduce the Protecting Pharmacies in Medicaid Act

Protecting Pharmacies in Medicaid Act

about 1 year ago·View on Congress.gov

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Stalled

No legislative action in over 90 days.

Legislative Progress

Senate

House

President

Law

Key Points

This bill bans a practice called 'spread pricing' in Medicaid. Currently, middleman companies often charge the government a high price for a drug but pay the pharmacy a much lower amount, pocketing the difference as profit.
Under the new rules, these middlemen must use a 'pass-through' model. This means they must pay the pharmacy the full amount the government provided for the drug, plus a fair fee for the pharmacist's professional services.
The goal is to help local pharmacies stay in business. Many small pharmacies are struggling or closing because the current system often pays them less than what it actually costs to buy and dispense medicine to patients.
The government will conduct regular surveys to find out the real price pharmacies pay for drugs. Pharmacies that receive Medicaid money must participate in these surveys or face fines of up to $100,000 for lying or refusing to answer.
These rules will apply to regular neighborhood pharmacies first, then to mail-order and specialty pharmacies about a year later. This ensures the government has accurate pricing data for all types of drug stores.
The bill provides $9 million per year to track drug prices and $5 million for a government watchdog to make sure the new rules are being followed and that middlemen aren't finding new ways to hide fees.

HealthcareEconomy Finance

Impact Analysis

Personal Impact

Who is affectedScoreImpactCertaintyScopeDurationSentiment

Scores: 1 = low, 5 = highSentiment: -5 to +5 (net benefit)

Milestones

2 milestones2 actions

Mar 11, 2025Senate

Read twice and referred to the Committee on Finance.

Mar 11, 2025

Introduced in Senate

What Happens Next

Projected impacts based on AI analysis

About 6 months after enactment

New drug pricing surveys and payment rules take effect for retail community pharmacies

Neighborhood pharmacies begin participating in monthly drug cost surveys, and states must use accurate acquisition cost data when setting Medicaid reimbursement rates. Pharmacies that refuse to participate or lie on surveys face fines up to $100,000.

18 months after enactment

Spread pricing ban and pass-through pricing requirements kick in for Medicaid contracts

All new contracts between states and pharmacy benefit managers or managed care plans must use transparent pass-through pricing. Middlemen can no longer pocket the difference between what Medicaid pays and what pharmacies receive. This also applies to mail-order and specialty pharmacies.

2027-01-01

HHS publishes guidance identifying which pharmacies count as non-retail pharmacies

The government clarifies which mail-order and specialty pharmacies must comply with the new survey and pricing rules, giving the industry clear standards to follow.

Related News

6 articles

Pharmacy Times·12 months ago

New Legislation Targets Spread Pricing in Medicaid

The Protecting Pharmacies in Medicaid Act (S. 927) aims to eliminate spread pricing by pharmacy benefit managers (PBMs). The bill requires full pass-through and transparency measures to help the government track Medicaid funds and prevent excessive profits at the expense of local pharmacies.

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Drug Topics·about 1 year ago

Bipartisan Bill Aims to Combat PBMs' Medicaid Spread-Pricing

A bipartisan group of U.S. Senators introduced the Protecting Pharmacies in Medicaid Act to limit spread pricing. The bill requires PBMs to pay pharmacies at a rate based on average acquisition costs and dispensing fees, potentially saving Medicaid an estimated $2 billion over 10 years.

HME News·about 1 year ago

Senators move to protect indie pharmacies

Senators Peter Welch and Roger Marshall introduced the Protecting Pharmacies in Medicaid Act to crack down on 'spread pricing.' The legislation would require Medicaid payments to PBMs to be passed directly to pharmacies, excluding administrative fees, to support struggling rural pharmacies.

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Related Bills

2 bills

S. 891Related bill

Bipartisan Health Care Act

Mar 6 — Read twice and referred to the Committee on Finance.

H.R. 1768Related bill

Lower Costs for Everyday Americans Act

Mar 3 — Referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, the Budget, the Judiciary, and Education and Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.