Pharmacists Fight Back in Medicare and Medicaid Act

The "Pharmacists Fight Back in Medicare and Medicaid Act" (HR6609) directly amends titles XI, XVIII, and XIX of the Social Security Act, establishing new requirements for Pharmacy Benefit Managers (PBMs) operating within Medicare and Medicaid. Specifically, for plan years beginning on or after January 1, 2027, PBMs must comply with pharmacy payment requirements, rebate pass-through requirements, and reporting requirements, and are prohibited from engaging in steering. This mandates that PBMs operating on behalf of Medicare and Medicaid plans cannot retain rebates from drug manufacturers and must pass them directly to the plans, fundamentally altering their revenue model. The money trail shifts from PBMs to Medicare and Medicaid plans, and potentially to pharmacies and consumers through lower drug costs. PBMs traditionally generate significant revenue by negotiating rebates from drug manufacturers and retaining a portion of these rebates. This bill eliminates that revenue stream for Medicare and Medicaid business. The direct beneficiaries are pharmacies, which will see more transparent and potentially higher reimbursement rates, and ultimately, the government and beneficiaries through reduced drug costs. The bill does not appropriate new funds but reallocates existing revenue streams within the healthcare ecosystem. Historically, efforts to increase PBM transparency and regulate their practices have met with strong industry opposition. For example, various state-level initiatives in the mid-2010s to regulate PBMs, such as Arkansas Act 900 in 2015, led to legal challenges but ultimately resulted in some states gaining more oversight. While direct federal legislation of this scope is less common, the trend has been towards greater scrutiny. When the Centers for Medicare & Medicaid Services (CMS) proposed a rule in 2019 to eliminate safe harbor protection for drug rebates under Medicare Part D, PBM stocks like CVS Health ($CVS) and UnitedHealth Group ($UNH) saw significant volatility, with $CVS dropping over 5% on the day of the announcement, though the rule was later withdrawn. Specific companies that stand to lose significantly are major PBMs, including CVS Health ($CVS) through its Caremark subsidiary, Cigna ($CI) through Express Scripts, and UnitedHealth Group ($UNH) through OptumRx. Elevance Health ($ELV), which operates IngenioRx, also faces negative impact. These companies derive substantial revenue from their PBM operations, and the mandated rebate pass-through and anti-steering provisions will directly reduce their profitability in the Medicare and Medicaid segments. Pharmacies, such as Walgreens Boots Alliance ($WBA) and Rite Aid ($RAD), may see a slight positive impact from more favorable reimbursement terms, but the primary financial shift is away from PBMs. This bill has been referred to the Committee on Energy and Commerce and the Committee on Ways and Means. The significant number of cosponsors (34) and the bipartisan nature of the sponsors (Rep. Auchincloss D-MA, Mrs. Harshbarger R-TN, Mr. Comer R-KY, Mr. Carter R-GA) indicate substantial legislative momentum. If it passes committee, it will move to a floor vote. The earliest impact on PBM operations would be for plan years beginning on or after January 1, 2027, providing a lead time for companies to adjust their business models.