S-4293-117
Placed on Senate Legislative Calendar under General Orders. Calendar No. 647.
Sponsored by Maria Cantwell (D-WA)
What it does
This bill would prohibit pharmacy benefit managers (PBMs) — the companies that manage prescription drug benefits for health insurers — from charging health plans more than they pay pharmacies for the same drug, and from arbitrarily clawing back payments or cutting reimbursements to pharmacies. PBMs could avoid these prohibitions only by passing 100% of any discounts or price concessions directly to the health plan and fully disclosing their costs, fees, markups, and payments. PBMs would also be required to file annual reports with the Federal Trade Commission (FTC), and both the FTC and state attorneys general would be authorized to enforce the law.
Who benefits
Patients enrolled in employer-sponsored or individual health insurance plans who may see lower out-of-pocket drug costs if savings are passed through. Independent and community pharmacies that would be protected from arbitrary reimbursement clawbacks and fee increases. Health insurers and self-insured employers who would gain greater visibility into how PBMs price and manage drug benefits. State attorneys general who would gain new enforcement authority. The FTC, which would receive expanded oversight jurisdiction over PBMs.
Who is hurt
Pharmacy benefit managers, whose current business model relies in part on the spread between what they charge health plans and what they pay pharmacies — a practice this bill would restrict or eliminate. PBM parent companies and affiliated pharmacies that benefit from vertically integrated arrangements. Health plans that contract with PBMs and may face renegotiated contract terms or higher administrative costs during a transition period. Shareholders of publicly traded PBM companies, who could see reduced revenues reflected in stock valuations.
Supporters argue
Supporters argue that PBMs operate with almost no transparency, allowing them to pocket the difference between what they charge insurers and what they pay pharmacies — a practice known as "spread pricing" — without patients or plans ever knowing. This hidden markup, they contend, inflates drug costs for millions of Americans and diverts savings that should flow to patients or health plans. By requiring full pass-through of discounts and mandatory disclosure of fees and payments, the bill would force PBMs to compete on the quality of their services rather than on their ability to obscure pricing. Supporters also point to FTC investigations that have raised serious concerns about PBM market concentration and its effect on drug affordability, arguing that federal enforcement authority is necessary because PBMs currently operate in a regulatory gap between state insurance law and federal oversight.
Opponents argue
Opponents argue that PBM spread pricing and negotiated discounts are legitimate business practices that reflect the value PBMs provide by aggregating purchasing power and driving down list prices from drug manufacturers. Mandating 100% pass-through of all price concessions, they contend, could eliminate the financial incentives PBMs use to negotiate deeper discounts, potentially raising costs for health plans and patients over time. Critics also argue that the disclosure requirements are overly broad and could expose proprietary negotiating strategies, weakening PBMs' leverage with pharmaceutical manufacturers and ultimately harming the very patients the bill aims to help. Some opponents further argue that the bill's vague standards — such as prohibiting "arbitrary" or "unfair" clawbacks — give the FTC and state attorneys general excessive discretion to second-guess legitimate business decisions, creating legal uncertainty across the prescription drug supply chain.
Constitutional context
The bill rests primarily on Congress's Commerce Clause authority (Art. I, §8), as PBMs operate across state lines and are integral to interstate commerce in prescription drugs. The grant of enforcement authority to the FTC implicates the non-delegation doctrine and post-Loper Bright judicial review, meaning courts would independently assess whether the FTC's interpretations of terms like "arbitrary" or "unfair" are legally valid, rather than deferring to the agency. The major questions doctrine (West Virginia v. EPA) could be raised if the FTC attempts to use this authority to issue broad rules reshaping the PBM industry. Concurrent enforcement authority granted to state attorneys general raises potential preemption questions under the Supremacy Clause, particularly where state PBM laws already exist.
Checks and balances
The bill shifts regulatory authority toward the executive branch by expanding FTC jurisdiction over PBMs, a sector not previously subject to direct federal oversight of this kind. It also empowers state attorneys general, distributing enforcement across both federal and state levels. Congress retains oversight through the annual FTC reporting requirement. The post-Loper Bright environment means federal courts — not the FTC — would have the final word on interpreting ambiguous statutory terms, limiting agency discretion and shifting interpretive power toward the judicial branch.
Historical precedent
Multiple states (e.g., Arkansas, Ohio, Kentucky) have enacted PBM spread pricing transparency laws since 2017. The 21st Century Cures Act (2016) included PBM reporting requirements for Medicaid managed care. The Consolidated Appropriations Act of 2021 imposed some PBM disclosure requirements on employer-sponsored plans under ERISA.