Sens. Marshall and Welch Introduce Legislation to Cut Costs for Medicaid, Protect Independent Pharmacies, and Curb Abusive Practices from PBMs

(Washington, D.C., April 4, 2023) – U.S. Senators Roger Marshall, M.D. and Peter Welch (D-VT) have introduced the Drug Price Transparency in Medicaid Act of 2023, legislation to limit abusive pricing practices by pharmacy benefit managers (PBMs), including the use of a technique called ‘spread pricing,’ where PBMs charge Medicaid more than they pay pharmacies for a particular drug. In so doing, PBMs increase their profits while driving up costs for Medicaid and independent pharmacies that are already struggling to stay in business. The bill would save Medicaid an estimated $1 billion over 10 years. 

“Pharmaceutical industry middlemen use a variety of tricks to line their own pockets at the expense of small, independent pharmacies and senior citizens,” Senator Marshall said. “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 are an essential source of social connection and health care in our rural communities. But PBM spread pricing is making it harder than ever for independent pharmacies to stay in business,” Senator Welch said. “With this bill, Senator Marshall and I are taking an important step to limit abusive pricing practices, protect our independent pharmacies, and support our rural communities. I’m grateful for his partnership to advance this bipartisan legislation, and I will continue to fight to protect the health, wellbeing, and economic opportunity of Vermont’s rural communities.”    

Companion legislation was introduced in the House of Representatives by Representatives Buddy Carter (GA-01) and Vincente Gonzalez (TX-34).   

“PBMs have been allowed to rob patients, small businesses, and taxpayers blind for decades. As a pharmacist, I’ve seen firsthand how patients have been forced to stay sick and forgo medication due to the broken process. With this bill, we can hold PBMs accountable for their role in increasing the cost of health care and pocketing taxpayer money. I am proud that there is bipartisan, bicameral support for protecting the lives, health, and pocketbooks of patients across America,” said Rep. Carter 

“Patients should not have to decide between buying life-saving medicine or groceries. Prescription drug prices have become so high that patients are having to make these difficult and dangerous choices,” stated Rep. Gonzalez. “I am proud to re-introduce this bipartisan bill with Congressman Carter to put patients first, hold industry accountable, and bring down the price of life saving medicine.”   

The Drug Price Transparency in Medicaid Act of 2023 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.    

‘Spread pricing’ has been linked to the increasing failure rate for independent pharmacies, which provide a critical source of health care and community for rural communities in Vermont, Kansas, and across the United States.    

Other sponsors in the House of Representatives include Representatives Elise Stefanik (NY-21). Deborah Ross (NC-02), Rick Allen (GA-12), and Jake Auchincloss (MA-04). The bill is endorsed by the National Community Pharmacist Association, the National Association of Specialty Pharmacy, the National Association of Chain Drug Stores, the National Grocers Association, the American Pharmacists Association, and FMI.