To amend title XVIII of the Social Security Act to require that coinsurance for drugs under Medicare part D be based on the drug’s actual acquisition cost and not the drug’s wholesale acquisition cost.
Analysis under review: This bill has generated analysis that may be too generic or incomplete. Clause-level evidence remains available below.
Summary
What This Bill Does
The Reducing Drug Prices for Seniors Act changes how Medicare Part D calculates what seniors pay out-of-pocket for prescription drugs. Starting January 1, 2026, when seniors pay coinsurance (a percentage of the drug price) in the coverage gap, that percentage will be based on the actual negotiated price that Medicare plans pay to pharmacies—which includes manufacturer rebates and discounts—rather than the higher "list price" (wholesale acquisition cost). This means seniors would directly benefit from the discounts and rebates that drug manufacturers already give to Medicare plans.
Who Benefits and How
Medicare Part D enrollees—seniors and people with disabilities—will see lower out-of-pocket costs when they fill prescriptions in the coverage gap (the phase between their annual deductible and the catastrophic coverage threshold). Instead of paying 25% of a drug's list price of $1,000 (which equals $250), they would pay 25% of the actual price after a $300 manufacturer rebate (which equals $175). This change passes the savings from manufacturer rebates directly to patients instead of keeping them with insurance companies and pharmacy benefit managers.
Who Bears the Burden and How
Pharmacy Benefit Managers (PBMs) and Medicare Part D plan sponsors will lose significant revenue. Currently, PBMs profit from "spread pricing"—charging patients coinsurance based on the higher list price while actually paying pharmacies the lower negotiated price. This bill eliminates that profit margin. Plan sponsors will also face administrative costs to update their systems, retrain staff, and modify how they process prescription claims to use the actual acquisition cost data already reported to Medicare.
Key Provisions
• Requires coinsurance calculations to use actual acquisition cost (AAC) instead of wholesale acquisition cost (WAC) when AAC is lower
• Defines AAC as the negotiated price net of all manufacturer-provided rebates, discounts, and price concessions
• Takes effect January 1, 2026, for all Medicare Part D plans
• Applies only to drugs in the coverage gap (between the deductible and out-of-pocket threshold)
• Uses existing Medicare data infrastructure (the Detailed DIR Report) to determine actual acquisition costs
• Does not apply to the catastrophic coverage phase or drugs covered by the manufacturer discount program
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers.
At a Glance
What This Bill Does
Requires Medicare Part D coinsurance to be calculated based on actual acquisition cost (negotiated price net of rebates) rather than wholesale acquisition cost, reducing out-of-pocket costs for seniors.
Who Benefits
- Medicare Part D enrollees (seniors and disabled individuals)
- Low- to moderate-income beneficiaries in the coverage gap who pay coinsurance
Who Bears Costs
- Pharmacy Benefit Managers (PBMs) - lose profit from spread pricing between WAC and AAC
- Part D plan sponsors - reduced revenue from coinsurance based on lower AAC vs WAC
- Medicare Advantage organizations offering MA-PD plans - administrative complexity
Key Policy Areas
Healthcare, Medicare, Prescription Drugs
Primary Purpose
Requires Medicare Part D coinsurance to be calculated based on actual acquisition cost (negotiated price net of rebates) rather than wholesale acquisition cost, reducing out-of-pocket costs for seniors.
Policy Domains
Legislative Strategy
"Reduce Medicare beneficiary out-of-pocket drug costs by ensuring coinsurance reflects actual negotiated prices (including manufacturer rebates) rather than higher wholesale prices, thereby making rebates benefit patients directly rather than just plan sponsors and PBMs."
Identified Gains
- Medicare Part D enrollees (seniors and disabled individuals)
- Low- to moderate-income beneficiaries in the coverage gap who pay coinsurance
Identified Costs
- Pharmacy Benefit Managers (PBMs) - lose profit from spread pricing between WAC and AAC
- Part D plan sponsors - reduced revenue from coinsurance based on lower AAC vs WAC
- Medicare Advantage organizations offering MA-PD plans - administrative complexity
Sponsors
Legislative Progress
IntroducedMr. Davis of North Carolina (for himself and Mr. Pfluger) …
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
Pharmacy Benefit Managers (PBMs) administering Medicare Part D plans
Medicare Part D prescription drug plan sponsors (standalone PDPs and MA-PD plans)
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
- "cms"
- → Centers for Medicare & Medicaid Services
- "plan_sponsors"
- → Prescription drug plan (PDP) and MA-PD plan sponsors
- "the_secretary"
- → Secretary of Health and Human Services
Key Definitions
Terms defined in this bill
The negotiated price of the covered part D drug under the prescription drug plan or MA-PD plan, net of any manufacturer-provided price concessions (as defined under section 423.100 of title 42, Code of Federal Regulations), as reported for such drug in the Detailed DIR Report submitted by the sponsor or organization offering the plan for the previous plan year.
Report submitted by plan sponsors showing Direct and Indirect Remuneration (rebates, discounts, and other price concessions) received from manufacturers.
Drugs described in subsection (b)(8) (catastrophic coverage) or (b)(9) (applicable beneficiaries under manufacturer discount program) are excluded from the actual acquisition cost requirement.
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology