S-5586-119
Read twice and referred to the Committee on Finance.
Sponsored by Mark Warner (D-VA)
What it does
The bill would require the HHS Secretary to survey drug acquisition prices at "non-retail" pharmacies (such as mail-order and specialty pharmacies) to set national average cost benchmarks for Medicaid. It would require states to make those pharmacies respond to the surveys, and would require the Secretary to set civil monetary penalties for non-response. The bill would bar states from using the data to set payment rates for retail community pharmacies, exclude nursing home, hospital, government, nonprofit and low-volume pharmacies, and appropriate $5 million (2027) for Inspector General oversight and $9 million per year for the survey program. Other limits apply, including an effective date about 18 months after enactment.
Who benefits
State Medicaid programs and federal budget officials that may gain better data on what mail-order and specialty pharmacies actually pay for drugs. Independent retail community pharmacies, which would be shielded from having non-retail data used to set their rates. Researchers and Congress, which would get public survey data and Inspector General studies on pharmacy benefit manager (PBM) affiliations and internal transfer prices.
Who is hurt
Mail-order and specialty pharmacies, including PBM-affiliated ones, which would face new reporting duties and possible civil monetary penalties for non-response. These pharmacies could also see lower Medicaid payments if benchmarks reveal lower acquisition costs. State Medicaid agencies would bear administrative work to enforce survey participation. Federal taxpayers would fund the added appropriations.
Supporters argue
Supporters argue that Medicaid currently lacks reliable acquisition-cost data for specialty and mail-order pharmacies, which handle high-cost drugs, so payments may not match actual costs. They contend that mandatory surveys, public reporting, and Inspector General review of PBM-affiliated pharmacies would improve accuracy, while the bar on using the data for retail pharmacy rates protects community pharmacies.
Opponents argue
Opponents argue that mandatory surveys with civil monetary penalties add compliance burdens on pharmacies, especially smaller specialty providers, and may produce benchmarks that understate the costs of handling complex drugs. They contend that benchmarks could push payments below real costs, threaten patient access to specialty drugs, and add federal spending and state administrative work.
Constitutional context
Congress acts under the Taxing and Spending Clause by attaching survey conditions to Medicaid funds, and the Commerce Clause supports regulating pharmacy pricing data. Under NFIB v. Sebelius (2012), conditions on existing Medicaid funds must not be coercive, and this modest data-reporting condition appears unlikely to raise that concern.
Checks and balances
The bill would give the HHS Secretary and the HHS Inspector General more authority over pharmacy data and penalties, while Congress keeps oversight through Inspector General reports and appropriations, and penalties follow existing civil monetary penalty procedures.
Historical precedent
Section 1927(f) already directs a national average drug acquisition cost survey of retail community pharmacies for Medicaid, and this bill extends a similar approach to non-retail pharmacies.