S-127-118
Placed on Senate Legislative Calendar under General Orders. Calendar No. 283.
Sponsored by Maria Cantwell (D-WA)
What it does
This bill would prohibit pharmacy benefit managers (PBMs) — companies that manage prescription drug benefits on behalf of health insurers — from charging health plans more than they pay pharmacies for drugs, and from arbitrarily clawing back payments or cutting reimbursements to pharmacies. PBMs would be exempt from these prohibitions only if they pass 100% of any drug discounts or rebates directly to the health plan and fully disclose their pricing, fees, and payments. PBMs would also be required to file annual reports with the Federal Trade Commission (FTC), and both the FTC and state attorneys general would be authorized to enforce the law.
Who benefits
Patients enrolled in employer-sponsored or individual health insurance plans who may see lower out-of-pocket drug costs if discounts are passed through to their plans. Independent and community pharmacies that would be protected from arbitrary reimbursement clawbacks and fee increases. Health insurance plan sponsors (employers, unions, government programs) that would receive full disclosure of PBM pricing and retain 100% of negotiated drug discounts. State attorneys general who would gain new enforcement authority. The FTC, which would receive new data and enforcement tools to oversee the PBM industry.
Who is hurt
Pharmacy benefit managers, whose current business models often rely on the spread between what they charge health plans and what they pay pharmacies — a practice this bill would restrict or eliminate. Large PBMs (e.g., those affiliated with major insurers or pharmacy chains) could face significant revenue losses. PBM employees could be affected if companies reduce operations in response to new restrictions. Pharmacies that currently benefit from favorable PBM contracts may face renegotiation. Some health plans could face administrative costs associated with receiving and processing new disclosure data.
Supporters argue
Supporters argue that PBMs operate with little transparency, allowing them to profit from the difference between what they charge health plans and what they actually pay pharmacies — costs that are ultimately passed on to patients and employers in the form of higher premiums and drug prices. They contend that requiring full pass-through of discounts and mandatory disclosure would eliminate hidden markups, ensure that negotiated savings reach the people paying for coverage, and give regulators the data needed to detect anticompetitive behavior. Supporters also argue that protecting pharmacies from arbitrary clawbacks preserves access to community and independent pharmacies, particularly in rural areas where they may be the only local option.
Opponents argue
Opponents argue that PBMs provide a legitimate and valuable service by negotiating lower drug prices from manufacturers, and that restricting how they are compensated could reduce their incentive to negotiate aggressively, potentially leading to higher drug costs overall. They contend that the bill's disclosure requirements are overly broad and could expose proprietary negotiating strategies, weakening PBMs' leverage with drug manufacturers. Opponents also argue that mandating 100% pass-through of discounts oversimplifies a complex market and may not account for the administrative services PBMs provide in exchange for a portion of those savings, and that existing state-level PBM regulations already address many of these concerns without federal intervention.