New Bill Demands Transparency from Pharmacy Benefit Managers Starting 2028: Could Lower Drug Costs for Medicare Part D and MA-PD Plans

The "Saving Seniors Money on Prescriptions Act" aims to shine a light on the often-murky world of Pharmacy Benefit Managers (PBMs) – the middlemen who negotiate drug prices between pharmaceutical companies and insurance plans. Starting January 1, 2028, this bill mandates a whole new level of transparency for PBMs working with Medicare Part D and Medicare Advantage Prescription Drug (MAPD) plans.

Peeling Back the Layers

This bill forces PBMs to be upfront about their dealings. The core of the legislation (SEC. 2) requires detailed annual reports from PBMs to both plan sponsors and the Secretary of Health and Human Services. These reports, due by July 1st each year, must include a laundry list of information, including:

• A complete list of dispensed drugs (brand name and generic).
• How many people are getting each drug, and in what quantities.
• The average wholesale acquisition cost (WAC) and average wholesale price (AWP) per day's supply.
• Total out-of-pocket costs for patients.
• The total amount of rebates received from drug manufacturers.
• All other direct or indirect remuneration.
• Average pharmacy reimbursement amount charged to the plan.
• Average National Average Drug Acquisition Cost (NADAC) for retail pharmacies.
• How much revenue the PBM itself is keeping.
• Total gross spending on prescription drugs by the plan.
• The total amount retained by the pharmacy benefit manager or an affiliate of such pharmacy benefit manager in revenue related to utilization of prescription drugs under that plan, inclusive of bona fide service fees.
• Total net spending on prescription drugs.
• Explanation of benefit designs that encourage enrollees to use affiliated pharmacies.
• List of brokers, consultants, advisors and auditors that receive compensation from the PBM or an affiliate.
• List of all pharmacies, wholesalers, distributors, private labelers, providers, group purchasing organizations, health plans, or any other entity that is an affiliate of the pharmacy benefit manager.

Think of it like this: if you're running a small business and hiring a contractor, you'd want an itemized bill, right? This bill essentially demands that level of detail from PBMs, so everyone knows where the money is going.

The Right to Audit

Besides the detailed reports, the bill also gives plan sponsors the power to audit PBMs every year (SEC. 2). This isn't just a suggestion; it's a right. If a plan sponsor thinks something looks fishy, they can dig deeper and demand records from the PBM. If the PBM doesn't comply, they could be on the hook for penalties and breach of contract. This is like having the ability to check the contractor's receipts and timesheets to make sure everything lines up.

Standardized Reporting

To make sure everyone's on the same page, the Secretary of Health and Human Services has until June 1, 2025, to create standard formats for these reports (SEC. 2). No more confusing spreadsheets or inconsistent data – this aims for a clear, uniform way of presenting the information. This would be like requiring all the contractors to use the same invoicing template, making it easier to compare bids and track expenses.

Potential Impact and Challenges

By increasing transparency, this bill could potentially lead to lower drug costs for Medicare Part D and MAPD enrollees. More oversight could also mean better deals for plan sponsors. It also means policymakers will have a clearer picture of the entire pharmaceutical supply chain, which could lead to more informed decisions down the road. However, there are potential pitfalls. PBMs might try to find loopholes in the reporting requirements (SEC. 2). For example, the definition of 'bona fide service fees' could become a point of contention. The bill also directs the Comptroller General to study existing reporting requirements (SEC. 2), acknowledging that there might be overlaps or conflicts that need to be addressed. It's like finally getting a handle on your company's expenses, only to realize there are other accounting issues you need to sort out.

Big Picture

This bill is a significant step towards demystifying the complex world of drug pricing. By requiring PBMs to open their books, it aims to level the playing field and potentially save money for both patients and the government. It's not a magic bullet, but it's a move towards greater accountability in a critical part of the healthcare system.