Press Release

Welch-Led Legislation to Support Independent Pharmacies and Cut Drug Costs Advances as Part of Bipartisan Senate PBM Accountability Legislative Package

Jul 27, 2023

WASHINGTON – Key provisions from Senator Peter Welch’s (D-VT) bipartisan Drug Price Transparency in Medicaid Act were included in The Modernizing and Ensuring PBM Accountability Act, a bipartisan package of bills aimed at holding pharmacy benefit managers (PBM) accountable for rising prescription drug prices. The legislative package advanced out of the United States Senate Committee on Finance this week with bipartisan support. 

“Many rural communities rely on independent pharmacies, but a practice known as ‘spread pricing’ by the middlemen of the pharmacy industry is raising drug prices and making it harder for our pharmacies to stay in business. Senator Marshall and I teamed up on bipartisan legislation to put an end to that harmful practice, and I’m proud to see key pieces of that bill included in the PBM Accountability legislative package passed through the Finance Committee this week,” said Sen. Welch.  

“I thank Chair Wyden and Ranking Member Crapo for including our spread pricing legislation in this strong bipartisan bill, and ‘Doc’ Marshall for his continued partnership. I am encouraged to see these policies advance through the Finance Committee and urge my colleagues to support this bill when it comes to the floor in the coming months. Patients in Vermont and across America will win,” Sen. Welch concluded. 

The Drug Price Transparency in Medicaid Act of 2023 would limit abusive pricing practices by 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.  

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, and across the United States.  

The bill is co-led by Senator Roger Marshall (R-KS).