Medicare Bill Forces PBMs to Pass All Rebates to Plans, Opens Pharmacy Networks by 2028

The Patients Before Middlemen Act is a major overhaul aimed at reshaping how prescription drugs are priced and dispensed within Medicare Part D. Starting in 2028, the bill mandates that Pharmacy Benefit Managers (PBMs) must pass 100% of manufacturer rebates and discounts directly to the plan sponsor, ending the practice of PBMs retaining these savings. It also requires that Medicare Part D plans allow any pharmacy to join their network, provided they agree to the plan’s standard contract terms, fundamentally changing pharmacy access for beneficiaries.

The Open Door Policy for Pharmacies

Imagine you live in a rural area, and the only pharmacy nearby is an independent shop. Historically, that pharmacy might have been excluded from your Medicare Part D network because the PBM preferred its own affiliated chain. This bill aims to stop that. Section 2 requires that starting in 2028, Part D plans must accept any pharmacy willing to agree to the standard contract terms. This is a huge win for consumer choice and for independent pharmacies, especially those the bill calls "essential retail pharmacies"—local spots in medically underserved areas. The Secretary must define what constitutes "reasonable and relevant" contract terms by April 2027, which is the crucial detail here; those standards will determine if the open-door policy is truly fair or just a formality.

To keep things honest, the bill creates a formal process for pharmacies to report unfair or unreasonable contract terms to the Secretary starting in 2028. If a PBM is found to be playing games, they face civil penalties. This provision (SEC. 2) puts a clear check on the PBMs' power to dictate who gets to be in the network, which should help keep local pharmacies afloat and accessible.

Moneyball: PBMs Must Pass the Savings

This is where the bill gets down to brass tacks on drug costs. Currently, PBMs often negotiate rebates from drug manufacturers, but they don't always pass the full amount to the plan sponsor, keeping a chunk as profit. The Patients Before Middlemen Act (SEC. 3) slams the door on that practice. Starting in 2028, PBMs can only be paid through "bona fide service fees"—meaning they get paid for the actual administrative work they do, not for keeping a percentage of the drug cost savings. Any rebate or discount they receive must be passed entirely to the plan sponsor.

For Medicare Part D plans, this could mean significant savings, which ideally translates into lower premiums or costs for beneficiaries. The catch is that PBMs might try to reclassify their earnings as "service fees" to maintain revenue. The bill tries to head this off by requiring the Secretary and the Inspector General to review payment arrangements to ensure they reflect fair market value for services rendered.

Mandatory Transparency: No More Black Boxes

If you've ever wondered how much your PBM actually makes off your prescriptions, this bill provides the answer—at least to the plan sponsor and the government. Section 3 imposes massive transparency requirements on PBMs. Every year, PBMs must provide a detailed report on every covered drug, including total rebates, the revenue the PBM kept, and, critically, a comparison of costs between prescriptions filled at the PBM's own affiliate pharmacies versus independent pharmacies.

This level of detail is unprecedented. For example, if a PBM owns a mail-order pharmacy, the report must show the cost ranges paid by the plan when you use the affiliate versus when you use a non-affiliate. This will expose any financial steering mechanisms the PBM uses to push patients toward its own businesses. Furthermore, plan sponsors gain the right to audit their PBM at least once a year to verify that the reported data and financial arrangements are accurate, giving them real teeth to enforce compliance.