U.S. Senators Roger Marshall, M.D. and Peter Welch have introduced a new bipartisan bill aimed at limiting harmful pricing practices by pharmacy benefit managers (PBMs). The bill, called the Protecting Pharmacies in Medicaid Act, targets the issue of “spread pricing,” a practice where PBMs charge Medicaid more for medications than what they pay to pharmacies, keeping the difference as profit. This practice has led to higher costs for Medicaid and financial strain for pharmacies, especially independent ones in rural areas.

The proposed legislation aims to fix this problem by ensuring that Medicaid’s payments to PBMs go directly to pharmacies, minus any administrative fees. It also requires pharmacies participating in state Medicaid programs to report the National Average Drug Acquisition Costs (NADAC) to improve transparency in drug pricing. The bill is expected to save Medicaid around $2 billion over the next 10 years and help support the future of independent pharmacies, which are essential to healthcare in rural communities across the U.S.

 “Pharmaceutical industry middlemen use a variety of tricks to line their own pockets at the expense of small, independent pharmacies and senior citizens,” said Senator Marshall. “Prohibiting PBM spread pricing will cut costs for prescription drugs relied upon by Medicaid enrollees while simultaneously preserving access to local pharmacies that have financially struggled in recent years due to PBMs cutting them out of their share of payments. I’m grateful to partner with Senator Welch on this important legislation that is pro-consumer, pro-small business, and pro-taxpayer.”