S-527-119
Placed on Senate Legislative Calendar under General Orders. Calendar No. 42.
Sponsored by Chuck Grassley (R-IA)
What it does
This bill would require the Federal Trade Commission (FTC) to produce a report examining anticompetitive practices in the pharmaceutical supply chain, with a focus on pharmacy benefit managers (PBMs). The report would specifically examine whether PBMs pay their own affiliated pharmacies more than independent pharmacies, and whether PBMs design drug formularies in ways that favor higher-cost drugs. The FTC would also be required to recommend ways to increase supply chain transparency, prevent anticompetitive conduct, and report on complaints received about sole-source drug manufacturers.
Who benefits
Patients who pay for prescription drugs and may benefit from greater pricing transparency. Independent (non-PBM-owned) pharmacies that may be disadvantaged by PBM self-dealing. Generic and lower-cost drug manufacturers whose products may be suppressed by PBM formulary design. Small and rural pharmacies that compete against vertically integrated PBM-owned chains. Policymakers and researchers who would gain access to structured FTC data on drug pricing practices. Health insurers and employers who fund prescription drug benefits and bear costs from PBM markups.
Who is hurt
The three largest PBMs — CVS Caremark, Express Scripts, and OptumRx — which collectively manage roughly 80% of U.S. prescriptions and whose business practices would be scrutinized. PBM-affiliated pharmacies that may currently benefit from preferential reimbursement rates. Pharmaceutical manufacturers of higher-cost brand-name drugs whose formulary positioning could be highlighted. Vertically integrated health conglomerates with PBM subsidiaries that could face increased regulatory and legislative pressure following the report.
Supporters argue
Supporters argue that PBMs operate with little transparency despite controlling the flow of hundreds of billions of dollars in drug spending annually, and that the FTC's own 2024 interim report found PBMs marked up specialty drug costs by as much as 2,000% over acquisition cost. They contend that mandating a formal report with specific findings on self-dealing and formulary manipulation gives Congress the factual foundation needed to craft targeted legislation, and that sunlight on these practices is a necessary first step toward lowering drug costs for the roughly 131 million Americans who take prescription drugs regularly.
Opponents argue
Opponents argue that the FTC already has broad authority to investigate anticompetitive conduct and has been actively studying PBMs since 2022, making a mandated report largely duplicative of ongoing agency work. They contend that a reporting requirement without any accompanying enforcement mechanism or structural remedy does nothing to immediately lower drug prices, and that the bill may create a false sense of legislative action while delaying more substantive policy changes — such as direct PBM regulation or rebate rule modifications — that could produce measurable consumer savings.
Constitutional context
Congress has broad authority to direct FTC investigations and reporting under the Commerce Clause (Art. I, §8, cl. 3), as pharmaceutical distribution is quintessentially interstate commercial activity under Wickard v. Filburn (1942). Because this bill directs a report rather than delegating broad rulemaking authority, it is unlikely to raise major questions doctrine concerns under West Virginia v. EPA (2022) or post-Chevron scrutiny under Loper Bright v. Raimondo (2024).
Checks and balances
The legislative branch gains a structured information-gathering mechanism over the executive-branch FTC; the FTC retains discretion over investigative methodology, and Congress would need to pass separate legislation to act on any recommendations.
Historical precedent
The FTC has previously been directed by Congress to study specific industries, including the 2003 Medicare Modernization Act provisions requiring FTC reporting on pharmaceutical competition; more recently, the FTC launched a 2022 study of PBM practices under existing Section 6(b) authority, producing an interim report in 2024.