New Bill Targets PBM Compensation: Price-Linked Fees Banned Starting 2027

This bill, specifically Section 2 of the DRUG Act, takes aim at how Pharmacy Benefit Managers (PBMs) – the middlemen who manage prescription drug benefits for health plans – get paid. Starting January 1, 2027, it prohibits PBMs from earning compensation that's tied to the price of drugs, or any discounts or rebates associated with them. The goal is to stop PBMs from potentially profiting more when drug prices are higher.

Untangling PBM Paychecks from Drug Prices

The core change here is the payment model shift. Instead of basing pay on drug costs or negotiated savings (which critics argue can create perverse incentives), PBMs will only be allowed to charge what the bill calls a "bona fide service fee". This isn't just any fee; it has strict rules. It must be a flat dollar amount, agreed upon upfront, and crucially, not linked to drug prices, discounts, or rebates. Think of it like paying a flat fee for managing your retirement account, rather than a percentage of your assets.

The Fine Print: What's a 'Bona Fide' Fee?

So, what qualifies as 'bona fide'? The bill says the fee must represent the fair market value for actual, itemized services the PBM provides – services the health plan would otherwise have to do itself. This is where things could get interesting. Defining 'fair market value' and verifying that the fee matches actual services rendered could be tricky in practice. Who decides what's 'fair', and how is it proven? This definition will be key to whether the rule works as intended or if PBMs find ways to structure fees that still indirectly reward higher drug spending.

Keeping Tabs: Enforcement and Penalties

Who's making sure PBMs follow these new rules? Enforcement falls to the Secretaries of Health and Human Services, Labor, and the Treasury. If a PBM takes payments that violate the rules, they have to return that money to the health plan or insurer. Plus, there's a penalty: $10,000 per day for each day the violation continues. This gives the rule some teeth, but effective enforcement across three departments will be essential.

What's Still Allowed?

It's also important to note what isn't changing. This bill doesn't stop PBMs from handling payments for the actual cost of drug ingredients or pharmacy dispensing fees. It also explicitly allows PBMs to pass along rebates, discounts, or other price concessions that genuinely lower the net cost of drugs for the health plan. The focus is strictly on preventing PBM compensation itself from being tied to the ups and downs of drug pricing and rebates.