S. 526 — Pharmacy Benefit Manager Transparency Act of 2025

This section prohibits pharmacy benefit managers (PBMs)—intermediaries that administer prescription drug benefits for health plans—or their affiliates, subsidiaries, or agents from (1) charging health plans or payers a different amount for a prescription drug's ingredient cost or dispensing fee than the amount reimbursed to pharmacies if the PBM retains the difference (i.e., spread pricing); (2) arbitrarily, unfairly, or deceptively reducing, rescinding, or clawing back pharmacy reimbursements except in cases of fraud, contract inconsistency, or unrendered services; or (3) increasing fees or lowering pharmacy reimbursements to offset federal reimbursement changes in federally funded health plans. A PBM does not violate prohibitions (1) or (3) if it passes along 100% of price concessions (e.g., rebates, discounts) to health plans or payers and fully discloses to health plans, payers, pharmacies, and federal agencies (on request) all drug costs, prices, reimbursements, fees, markups, discounts, and aggregate remuneration received from drug manufacturers.

This section prohibits any person from reporting false or misleading information related to pharmacy benefit management services (i.e., third-party administration of prescription drug benefits) to a federal department or agency if (1) the person knew or reasonably should have known the information was false or misleading, (2) the information was required by law to be reported, and (3) the information would affect federal statistical or analytical assessments of the pharmacy benefit management market.

This section requires each pharmacy benefit manager (PBM), or its affiliate, subsidiary, or agent, to report annually to the Federal Trade Commission (FTC) and Secretary of Health and Human Services, beginning one year after enactment, (1) the aggregate difference between amounts paid to the PBM by health plans and amounts paid by the PBM to pharmacies for prescription drugs; (2) aggregate generic effective rate fees, direct and indirect remuneration fees or price concessions, and rescinded or clawed-back payments to pharmacies; (3) explanations for moving prescription drugs to higher-cost formulary tiers (including any manufacturer or other entity request); and (4) reimbursement rate, fee, concession, and clawback differences between PBM-affiliated pharmacies and other pharmacies. This section further requires the FTC to submit annual reports to the Senate Committee on Commerce, Science, and Transportation and House Committee on Energy and Commerce—one summarizing enforcement actions, investigations, complaints, anonymized PBM reports, merger analyses, and policy recommendations, and a separate report to multiple committees on PBM formulary design and placement practices—and prohibits disclosure of trade secrets except as needed for enforcement or specified reviews. This section directs the Comptroller General of the United States to submit a report, not later than one year after enactment, to specified Senate and House committees analyzing PBMs' role in the pharmaceutical supply chain, competition (including market shares of the 10 largest PBMs), and use of rebates and fees.

This section establishes whistleblower protections prohibiting a pharmacy benefit manager, health plan, pharmaceutical manufacturer, pharmacy, or any affiliate, subsidiary, or agent thereof from retaliating against a covered individual for (1) reporting or assisting in reporting a reasonably believed violation of this Act to Congress, federal agencies, state attorneys general, state drug regulators, or law enforcement; (2) providing such information internally to a supervisor or other authorized employee; (3) testifying in an investigation or proceeding; or (4) assisting or participating in such an investigation or proceeding. It authorizes affected individuals to sue in federal district court for a jury trial seeking temporary relief, reinstatement with back seniority, twice the back pay owed with interest, consequential and compensatory damages, and litigation costs including attorneys' fees and expert witness fees. The section further provides that these rights and remedies cannot be waived by any employment policy or predispute arbitration agreement, which is invalid or unenforceable if it requires arbitration of such disputes.

This section establishes Federal Trade Commission (FTC) and state enforcement for violations of the Act. It authorizes the FTC to enforce the Act as a rule defining unfair or deceptive acts or practices under the FTC Act (15 U.S.C. 41 et seq.), including with respect to nonprofits and the business of insurance notwithstanding section 2 of the McCarran-Ferguson Act (15 U.S.C. 1012) or FTC jurisdictional limits (15 U.S.C. 44, 46); imposes an additional civil penalty of up to $1,000,000 per violation (with each day of a continuing violation treated separately and courts to consider seriousness, remedial efforts, and intent); and preserves other FTC authorities. The section further authorizes state attorneys general (or equivalent officials) to bring civil actions on behalf of state residents for violations, subject to prior notice to (or immediate notification of) the FTC, which may intervene and appeal; specifies venue and service of process rules; preserves state investigative powers and actions under state law; and prohibits conflicts with the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1001 et seq.). (Thus, states gain a federal private right of action for Act violations affecting residents.) It also establishes an affirmative defense in actions enforcing section 2.

This section prohibits a pharmacy benefit manager (including affiliates, subsidiaries, and agents) from including any information that identifies a patient or prescribing provider in disclosures or reports required by the Act.

This section establishes definitions for purposes of the Act. (1) Commission means the Federal Trade Commission; (2) covered individual means a current or former employee, contractor, subcontractor, service provider, or agent of a pharmacy benefit manager, health plan, pharmaceutical manufacturer, pharmacy, or affiliate thereof; (3) health plan means a group or individual health insurance plan or coverage, including any sponsored or funded by the federal government or a state, territory, or subdivision; (4) pharmacy benefit manager means an entity providing pharmacy benefit management services on behalf of a health plan, payer, or health insurance issuer; (5) pharmacy benefit management services means services pursuant to a written agreement with a payer or health plan, including negotiating prescription drug terms and rebates or managing prescription drug benefits (e.g., formulary management, claims processing, drug utilization review); and (6) prescription drug means (A) an FDA-approved drug under FDCA sections 201(g), 505, and 503(b)(1) (21 U.S.C. 321(g), 355, 353(b)(1)); (B) a biological product under PHSA section 351 (42 U.S.C. 262(i)(1)); or (C) a biosimilar or interchangeable product under PHSA section 351 (42 U.S.C. 262(i)).