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The Lower Costs More Transparency Act of 2023


The Lower Costs More Transparency Act of 2023, passed by the House 320-71 on Monday, December 11, 2023, would institute new transparency and pricing rules on pharmacy benefit managers (PBMs) and hospitals. The bill would require PBMs to semiannually report to health plan sponsors on the number and types of claims for covered drugs, including whether the drugs were brand-name or generic drugs and associated costs. Contracts with PBMs for employer-sponsored health plans must also allow health plan fiduciaries to audit certain claims and cost information without undue restrictions. Additionally, the bill would establish requirements for Medicare and Medicaid payments, and require certain providers and PBMs publicly list prices before patients are charged.

The bill also requires pass-through pricing models, and prohibits spread-pricing for payment arrangements with PBMs under Medicaid. Further, the bill requires health care providers and insurers to disclose certain information about health care costs (e.g., hospitals would be required to annually publish prices and related information, including discounted cash prices and negotiated charges), and provides funds for the Department of Health and Human Services, the Department of Treasury, and the Department of Labor to implement and enforce the bill's requirements.

Passage in the Senate is doubtful without revisions (e.g., the bill requires Medicare payments for certain services at off-campus hospital outpatient departments to be the same as those for other provider settings such as physician offices). However, the current atmosphere of bipartisanship regarding regulation of PBMs and lowering out-of-pocket costs for consumers make some form of related federal requirements likely.

Quarles will continue to monitor federal legislative efforts to regulate PBMs, as well as similar state legislative and regulatory efforts. If you have any questions, please contact your local Quarles attorney, or:

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