# Drug Price Transparency in Medicaid Act of 2021

This bill tackles a problem where middlemen in the drug supply chain are making extra money off Medicaid patients without anyone knowing about it. Specifically, it targets "spread pricing," a practice where pharmacy benefit managers (PBMs)—companies that handle prescription drug coverage for insurance plans—charge Medicaid more for a drug than they actually pay the pharmacy, pocketing the difference. The bill requires that when states contract with these middlemen to manage drug benefits, the payment system must be completely transparent, with all money flowing directly to pharmacies rather than getting stuck in the middle.

Here's what changes: States and managed care plans can no longer use PBMs or other contractors under a hidden markup system. Instead, they must use "pass-through pricing," which means the state or plan pays the actual cost of the drug plus a reasonable fee for the pharmacy's work, and that's exactly what the middleman passes along to the pharmacy. No hidden fees, no markups, no "post-invoice adjustments" that secretly reduce what pharmacies receive. The bill also requires complete transparency—PBMs must show states and federal officials all their costs, fees, discounts, and any other money they receive related to drug dispensing. If a PBM tries to keep any amount beyond the actual drug cost and a reasonable administrative fee, they can't claim federal matching funds for it.

The bill also protects hospitals and clinics that buy drugs at a discount through a federal program called 340B. Currently, some states and insurance plans try to prevent these providers from using their discounted drugs for Medicaid patients. This bill says that's not allowed—if a provider legally bought drugs at a discount, they can dispense them to Medicaid patients and get paid accordingly. Finally, the bill requires the federal government to conduct monthly surveys of what pharmacies actually pay for drugs and make that information public, so there's a clear benchmark for what fair reimbursement looks like. These changes take effect 18 months after the bill becomes law, giving states and plans time to renegotiate their contracts.

Drug Price Transparency in Medicaid Act of 2021

Carter, Earl L. "Buddy"

Drug Price Transparency in Medicaid Act of 2021 This bill requires pass-through pricing models, and prohibits spread-pricing, for payment arrangements with pharmacy benefit managers under Medicaid. The bill also extends funding for retail pharmacy surveys and requires additional information with respect to price concessions, dispensing fees, and survey participation to be made publicly available.