Washington D.C., December 27, 2025
U.S. Representatives Jake Auchincloss and Ryan Mackenzie have introduced the PBM FAIR Act, targeting pharmacy benefit managers (PBMs) to curb price-gouging in prescription drug costs. This bipartisan legislation seeks to establish fiduciary duties for PBMs, ensuring they prioritize the financial interests of their clients, and increase transparency in drug pricing. Supported by multiple senators and aligning with state reforms, the Act highlights the ongoing issues within the pharmaceutical industry that contribute to inflated medication costs and restrict patient choice.
Washington D.C.
In a bipartisan effort to address rising prescription drug costs and perceived inequities within the pharmaceutical supply chain, U.S. Representative Jake Auchincloss (D-Newton) and Republican U.S. Representative Ryan Mackenzie of Pennsylvania have introduced new legislation. The bill, titled the PBM Fiduciary Accountability, Integrity, and Reform (FAIR) Act, aims to curtail price-gouging and other practices by pharmacy benefit managers (PBMs), which serve as intermediaries in the health insurance industry. The legislation seeks to mandate that PBMs providing drug benefits for employer health plans act as fiduciaries, thereby placing a legal obligation upon them to prioritize the financial interests of their customers.
This bicameral initiative, also supported by Senators Roger Marshall (R-KS), Tim Kaine (D-VA), Maggie Hassan (D-NH), and Chuck Grassley (R-IA), comes amidst growing concerns that PBMs’ current operational models contribute to inflated drug prices, restrict patient choice, and negatively impact independent pharmacies. The bill specifically addresses the issue that PBMs managing employer health plans are not currently legally required to act in the best interest of employees. If enacted, the PBM FAIR Act would strengthen accountability for these entities, aiming to reduce hidden fees and practices that increase medication costs for individuals.
The Role of Pharmacy Benefit Managers and Emerging Concerns
Pharmacy benefit managers are third-party administrators of prescription drug programs, working with various payers such as commercial health plans, self-insured employer plans, and government programs like Medicare Part D and Medicaid. Their functions include negotiating rebates and discounts with drug manufacturers, processing claims, managing formularies (lists of covered drugs), and establishing pharmacy networks. These entities claim to reduce drug costs for insurers, which theoretically could lead to lower premiums and out-of-pocket expenses for patients.
However, over recent years, PBMs have faced increasing scrutiny from policymakers, regulators, and the public regarding their business practices, market consolidation, and transparency. Three major PBMs, namely CVS Caremark, Express Scripts (owned by Cigna), and OptumRx (owned by UnitedHealth), manage a significant portion of all prescription claims in the U.S., controlling approximately 80% of the market. This market concentration has raised concerns about anti-competitive behavior and its impact on drug pricing.
A primary point of contention is the practice of spread pricing, where a PBM pays a pharmacy a lower rate for a drug than it charges an insurer for the same drug, retaining the difference as profit. This practice can result in higher costs for insurers and financial strain on pharmacies due to reduced reimbursement levels. PBMs may also negotiate rebates with drug manufacturers for preferred placement on formularies, and some concerns exist that PBMs can retain a portion of these rebates rather than fully passing savings to insurers and patients. Such arrangements, critics argue, can incentivize PBMs to favor higher-priced drugs that yield larger rebates, potentially leading to increased costs for consumers, particularly those with high-deductible plans or without insurance.
Furthermore, allegations of self-dealing have surfaced, where an insurance company may direct patients to its own affiliated pharmacies, potentially limiting patient choice and under-reimbursing independent pharmacies. This vertical integration within the industry has been a significant area of concern for its potential to distort market competition.
Broader Legislative Landscape and Impact
The Auchincloss-Mackenzie bill joins a growing wave of federal and state-level initiatives seeking PBM reform. In 2024, twenty-four states passed thirty-three bills regulating PBMs, addressing issues such as spread pricing, transparency requirements, and rebate pass-throughs. For example, states like Idaho and Vermont have prohibited spread pricing, while others, including Massachusetts, have implemented licensing and transparency requirements for PBMs. Some states, like Arkansas, have even moved to ban PBMs from owning pharmacies, though such measures have faced legal challenges.
At the federal level, similar legislation, such as the PBM Reform Act of 2025, has been introduced, aiming to ban spread pricing in Medicaid, delink PBM compensation from drug costs in Medicare Part D, and increase transparency in drug pricing. The Federal Trade Commission (FTC) has also taken action, initiating legal proceedings against major PBMs for alleged market power abuse and inflated drug prices, particularly concerning insulin. These collective actions reflect a deepening national conversation about the mechanisms that determine medication accessibility and cost for millions of Americans, whose lives are touched by the efficacy of modern medicine and the systems that bring it to them.
Toward Greater Accountability
The introduction of the PBM FAIR Act underscores a persistent concern about the intricacies of prescription drug pricing and the impact on everyday lives. The human dimension of these economic structures is often felt acutely at the pharmacy counter, where the promise of healing meets the reality of cost. By seeking to establish a fiduciary duty for PBMs, the proposed legislation aims to inject a clearer standard of ethical and financial responsibility into a complex system, where the well-being of patients and the sustainability of community pharmacies are inextricably linked to the actions of powerful intermediaries. The hope remains that such legislative endeavors, grounded in careful consideration of empirical realities and a compassionate regard for those affected, can pave a path towards greater fairness and accessibility in healthcare.
Frequently Asked Questions (FAQ)
- What is the PBM Fiduciary Accountability, Integrity, and Reform (FAIR) Act?
- The PBM Fiduciary Accountability, Integrity, and Reform (FAIR) Act is new bipartisan legislation introduced by U.S. Representative Jake Auchincloss and Republican U.S. Representative Ryan Mackenzie, aimed at curtailing price-gouging and other practices by pharmacy benefit managers (PBMs).
- Who introduced the PBM FAIR Act?
- U.S. Representative Jake Auchincloss (D-Newton) and Republican U.S. Representative Ryan Mackenzie of Pennsylvania introduced the PBM FAIR Act. It is also supported by Senators Roger Marshall (R-KS), Tim Kaine (D-VA), Maggie Hassan (D-NH), and Chuck Grassley (R-IA).
- What is the primary goal of the PBM FAIR Act?
- The primary goal of the PBM FAIR Act is to mandate that pharmacy benefit managers (PBMs) providing drug benefits for employer health plans act as fiduciaries, thereby placing a legal obligation upon them to prioritize the financial interests of their customers.
- What are pharmacy benefit managers (PBMs)?
- Pharmacy benefit managers (PBMs) are third-party administrators of prescription drug programs for commercial health plans, self-insured employer plans, Medicare Part D plans, the Federal Employees Health Benefits Program, and state government employee plans. They act as intermediaries between drug manufacturers, pharmacies, and health insurance plans.
- What concerns are addressed by this legislation regarding PBMs?
- The legislation addresses concerns that PBMs’ current operational models contribute to inflated drug prices, restrict patient choice, and negatively impact independent pharmacies. It also addresses allegations of “self-dealing” and “spread pricing” by PBMs.
- What is “spread pricing” by PBMs?
- “Spread pricing” is a practice where a PBM pays a pharmacy a lower rate for a drug than it charges an insurer for the same drug, retaining the difference as profit.
Key Features of the PBM Fiduciary Accountability, Integrity, and Reform (FAIR) Act
| Feature | Description | Scope |
|---|---|---|
| Fiduciary Duty for PBMs | Requires PBMs providing drug benefits for employer health plans to act as fiduciaries, legally obligating them to prioritize the financial interests of their customers. | Nationwide |
| Curtailing Price-Gouging | Aims to reduce inflated drug prices resulting from PBM practices. | Nationwide |
| Addressing “Self-Dealing” | Targets practices where PBMs may favor affiliated pharmacies or insurance company interests. | Nationwide |
| Enhancing Transparency | Seeks to curb hidden fees and practices that increase medication costs for individuals. | Nationwide |
| Bipartisan Support | Introduced by members from both Democratic and Republican parties, indicating broad concern over PBM practices. | Nationwide |
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