The "Patients Before Middlemen Act" aims to enhance transparency and accountability within Medicare Part D by reforming the practices of pharmacy benefit managers (PBMs). It seeks to ensure that Medicare beneficiaries have greater access to pharmacies and that PBMs operate with clearer financial structures. The legislation introduces new requirements for PBMs and prescription drug plan (PDP) sponsors, effective for plan years beginning on or after January 1, 2028.

A core provision mandates that PDP sponsors must permit any willing pharmacy meeting standard contract terms to participate in their network. The Secretary of Health and Human Services will establish standards for reasonable and relevant contract terms and conditions by April 2027, following an information request to gather input on various aspects of PBM-pharmacy contracts, including reimbursement and auditing practices.

The bill also focuses on protecting essential retail pharmacies, defined as independent pharmacies in underserved or less competitive geographic areas not affiliated with PBMs. The Secretary will publish biennial reports on trends affecting these pharmacies, such as reimbursement and network participation, and maintain a public list of them. PDP sponsors must also report on their affiliated pharmacies and any incentive payments made.

A significant change for PBMs is the requirement that they derive no income other than bona fide service fees, meaning compensation must be flat dollar amounts for actual services rendered, not tied to drug prices or formulary placement. Manufacturer rebates, discounts, and price concessions are permitted only if they are fully passed through to the PDP sponsor and comply with existing direct and indirect remuneration (DIR) requirements. Any unlawful remuneration must be disgorged by PBMs to the PDP sponsor.

PBMs will be required to submit extensive annual reports to PDP sponsors and the Secretary, detailing drug-specific costs, spending, rebates, and PBM-retained revenue. These reports will also cover affiliate pharmacy dispensing, generic/biosimilar coverage, and compensation to brokers. PDP sponsors are granted annual audit rights to verify PBM compliance and the accuracy of reported information, with PBMs obligated to provide all necessary records, including from affiliates.

To ensure compliance, the bill establishes an enforcement process allowing pharmacies to submit allegations of contract term violations, with protections against retaliation. The Secretary can investigate and impose civil monetary penalties or sanctions on non-compliant PDP sponsors. PBMs will be held accountable by requiring them to reimburse PDP sponsors for penalties incurred due to PBM-delegated responsibilities, and they will face punitive remedies for breach of contract for non-compliance.