White House signs H.R. 7148 into law, tightening rules on PBMs in effort to lower drug prices

The White House announced that congressional bill H.R. 7148 has been signed into law, which includes reforms targeting pharmacy benefit manager (PBM) practices in Medicare Part D by shifting compensation away from rebate-linked incentives and expanding transparency requirements.

According to AJMC.com, the spending law introduces Medicare Part D PBM reforms designed to reduce incentives tied to higher list prices. The policy "delinks" PBM compensation from rebates and list prices by moving PBMs toward flat administrative fees, a change supporters say can weaken "rebate maximization" and steer plans away from higher-priced drugs that generate bigger rebates.

Under the new provisions described in coverage of the law, PBMs would be required to pass through 100% of rebates, fees, and other remuneration to the payer, with Centers for Medicare & Medicaid Services (CMS) monetary penalties available for noncompliance. The goal, as reported by AJMC, is to ensure rebate dollars do not remain with middlemen and to improve accountability for how savings are handled.

The law’s transparency requirements expand reporting intended to shed light on "gross-to-net" drug spending and PBM practices. Reported data would include prescription drug spending, manufacturer rebates, spread pricing arrangements, formulary placement rationale, and information about incentives that steer patients toward PBM-affiliated pharmacies—details regulators can use to track where dollars flow in Part D.

Pharmacy benefit managers operate between insurers/payers, drug manufacturers, and pharmacies—negotiating rebates and building formularies and pharmacy networks that shape what patients pay and where they can fill prescriptions. Federal scrutiny has intensified: the Federal Trade Commission's (FTC) interim staff report on "prescription drug middlemen" argues PBM concentration and vertical integration can disadvantage patients and independent pharmacies without sufficient transparency.

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