Welch: bill would protect independent pharmacies, reduce Medicaid costs

by Sen. Peter Welch

I introduced last week to save Medicaid $1 billion and help ensure Vermont’s independent pharmacies are getting a fair deal. My bipartisan bill, the Drug Price Transparency in Medicaid Act, would stop something called “spread pricing” — an abusive practice by pharmacy benefit managers (PBMs) that drives up costs for the Medicaid program and our independent pharmacies.  

The Problem

Medicaid often works with PBMs to get discounts on prescription drugs. They agree on a price, then Medicaid pays the PBM. PBMs then pay the pharmacy that fills your prescriptions. Spread pricing is when PBMs pay the pharmacy less than what Medicaid paid the PBM, pocketing the difference.

Sen. Peter Welch

The problem is that independent pharmacies are getting paid less by PBMs than what it costs to fill the prescription for the patient. It’s not sustainable for consumers and it’s not sustainable for independent pharmacies. Independent pharmacies around Vermont have been closing, which harms the whole community.

My Bill

My bill would require PBMs to pass along the same price they agree to with Medicaid down to the pharmacy, to stop them from skimming off the top.

Folks from both sides of the aisle can see this is a problem. I introduced this bill with Sen. Marshall, Republican from Kansas. Losing our small and independent pharmacies hurts communities across the country.

The Big Picture

One in five people in America rely on Medicaid for their health care. This bill would save the program $1 billion over the next ten years and help thousands of independent pharmacies.

I’ve also signed on to two otherbills that would make a similar change for Medicare and private insurers and require more oversight of PBMs. These three bills will ensure that PBMs give pharmacies a fair price in every market. 

These bills would help keep our local pharmacies open so communities can continue to rely on them. It’s a win for rural patients and rural small business.

The author is a Norwich resident and U.S. Senator from Vermont.

Categories: Commentary