Member Login
Search

LUGPA Policy Brief: The Delinking Revenue from Unfair Gouging (DRUG) Act

March 2025

Pharmacy Benefit Managers (PBMs) play a significant role in the pharmaceutical supply chain by negotiating drug prices and managing prescription drug benefits on behalf of health insurers, Medicare Part D plans, large employers, and other payers. Their stated goal is to reduce administrative costs and improve efficiency in drug pricing. However, concerns have emerged regarding their influence on prescription drug costs and access to care.

PBMs determine patient eligibility, administer plan benefits, and negotiate reimbursement rates between pharmacies and insurers. They do not handle the physical distribution of prescription drugs but influence pricing and pharmacy reimbursement rates. Their consolidation and business practices have led to scrutiny from regulators and policymakers, particularly regarding their impact on drug affordability and independent pharmacies.

Legislative Response to PBM Practices

In response to mounting concerns about PBMs, both state and federal lawmakers have introduced regulations aimed at increasing transparency and accountability in the industry. Reforms include licensing requirements, pharmacy audit standards, and pricing oversight measures designed to reduce PBM control over drug costs.

The DRUG Act: Addressing PBM Conflicts of Interest

In March, Representative Mariannette Miller-Meeks, M.D. (R-IA) introduced the Delinking Revenue from Unfair Gouging (DRUG) Act, a bipartisan bill aimed at curbing PBM practices that contribute to higher drug prices. Co-sponsored by Representatives Nannette Barragan (D-CA), Nicole Malliotakis (R-NY), Brad Schneider (D-IL), Rick Allen (R-GA), and Donald Norcross (D-NJ), the DRUG Act introduces critical reforms to the PBM payment structure.

Key Provisions of the DRUG Act:

  • De-Linking PBM Fees from Drug Prices: The bill prohibits PBMs from charging fees based on a percentage of drug prices. Instead, PBMs would be required to operate under a flat-fee model for managing drug benefits.
  • Eliminating Incentives for Higher-Priced Drugs: By shifting PBM revenue away from drug price-based fees, the DRUG Act removes financial incentives that drive PBMs to promote higher-cost medications.
  • Enhancing Transparency: The bill requires PBMs to disclose financial arrangements with drug manufacturers, ensuring greater accountability in the negotiation process.
  • Promoting Cost Savings for Patients: By reducing the influence of PBMs on drug selection, the DRUG Act aims to lower costs for consumers and improve access to affordable medications.

LUGPA strongly supports legislative efforts that promote transparency, competition, and fair pricing in the pharmaceutical supply chain. The DRUG Act represents a meaningful step toward addressing PBM conflicts of interest and ensuring that patient care decisions are driven by medical necessity rather than financial incentives.

As PBM reform efforts continue to evolve, LUGPA will:

  • Advocate for policies that improve patient access to affordable medications.
  • Support legislative measures that promote fair competition and transparency.
  • Engage with lawmakers to ensure that independent physician practices and patients are not disadvantaged by PBM business practices.

The DRUG Act is a critical bipartisan initiative that aims to reform PBM practices and prioritize patient care over corporate profits. By delinking PBM fees from drug prices, the legislation takes a significant step toward curbing rising prescription drug costs and ensuring greater fairness in the pharmaceutical supply chain. LUGPA remains committed to advocating for policies that enhance transparency, protect independent practices, and improve healthcare affordability for patients.