On February 3, President Trump signed into law that reform
pharmacy benefit manager (PBM) practices in Medicare Part D.
The law requires, among other things, the Department of Health
and Human Services (HHS) to define and enforce “reasonable
and relevant” Medicare Part D contract terms; allows HHS to
track payment trends to pharmacies and pharmacy inclusion in
PBM networks, including a new designation of essential retail
pharmacies; establishes certain contract guidelines between PBMs
and plans; and sets forth PBM reporting requirements.
The following is a summary of key components of the laws passed
that govern PBMs that most impact pharmacies.
Reforms to Medicare Part D
Plans “Reasonable and Relevant”
Contract Terms for Pharmacies
Overview
Beginning in plan year 2029, Part D plan sponsors — both
standalone prescription drug plans (PDPs) and Medicare Advantage
prescription drug plans (MA-PDPs) (collectively known as PDP
sponsors) — must offer network pharmacies contract terms that
are “reasonable and relevant.” Additionally, PDP sponsors will be
required to let any pharmacy participate in their networks so long as
they meet the “reasonable and relevant” contract terms.
Specific Terms & RFI
According to the law, the Secretary of Health and Human Services
will formulate the specific “reasonable and relevant” contract
terms that PDP sponsors will be required to offer pharmacies.
The secretary will also issue a request for information (RFI)
from the public seeking input on what constitutes reasonable and
relevant terms, and the secretary must issue this request by April
1, 2027. This RFI will seek public input on: trends in prescription
drug plan and network pharmacy contract terms and conditions;
current prescription drug plan and network pharmacy contracting
practices; whether pharmacy reimbursement and dispensing fees
paid by PDP sponsors to network pharmacies sufficiently cover
the ingredient and operational costs of such pharmacies; the use
and application of pharmacy quality measures by PDP sponsors
for network pharmacies; PDP sponsor restrictions or limitations
on the dispensing of covered part D drugs by network pharmacies
(or any subsets of such pharmacies); PDP sponsor auditing
practices for network pharmacies; areas in current regulations or
program guidance related to contracting between prescription
drug plans and network pharmacies requiring clarification or
additional specificity; factors for consideration in determining the
reasonableness and relevance of contract terms and conditions
between prescription drug plans and network pharmacies; and
other issues as determined appropriate by the secretary.
The secretary must establish “reasonable and relevant” terms
by April 3, 2028, so they can be included in the PDP sponsor
contracts offered to network pharmacies in spring 2028 for the
2029 Part D plan year.
Violations
By January 2029, the secretary must develop the process for
allowing pharmacies to report violations by PDP sponsors for
violating reasonable and relevant contract terms. The secretary
is also tasked with developing a standardized template for
pharmacies to submit these violations by PDP sponsors.
Frivolous Allegations
If the secretary determines that a pharmacy has submitted
frivolous allegations on a routine basis that PDPs are violating
reasonable and relevant contract terms, the secretary may
temporarily prohibit such pharmacy from using the allegation
submission process.
Anti-Retaliation
PDPs cannot retaliate against pharmacies that submit violations to
the secretary, nor can they otherwise coerce, intimidate, threaten,
or interfere with the ability of a pharmacy to submit any such
allegations.
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By Steve Postal, Senior Director, Policy and Regulatory Affairs at National Community Pharmacists
Association (NCPA), and Editorial Director of American Society for Pharmacy Law (ASPL)
SPRING 2026 I RETAIL/COMMUNITY • SPECIALTY • LTC
PBM Reform
Signed Into Law
What Pharmacies Need to Know