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Audit of Vertically Integrated Medicare Part D Sponsors

CMS oversees prescription drug coverage for Medicare Part D enrollees. CMS contracts with health insurers, known as plan sponsors, who are responsible for delivering the benefit through a network of pharmacy providers. Under Part D, sponsors often contract with pharmacy benefit managers (PBMs) to manage or administer the drug benefit on a sponsor's behalf. PBM services may include contracting with pharmacies to establish pharmacy networks and negotiate pharmacy reimbursement rates.

In recent years, the pharmaceutical market has experienced a wave of vertical integration between PBMs, health insurers, and pharmacies. Concern has been raised about the vertically integrated model. One such concern is that, by owning many links in the chain, a vertically integrated Medicare Part D sponsor may inflate drug prices. We will determine the impact of related entity transactions within select vertically integrated entities on the prices for covered Part D drugs.

Announced or Revised Agency Title Component Report Number(s) Expected Issue Date (FY)
April 2024 Centers for Medicare and Medicaid Services Audit of Vertically Integrated Medicare Part D Sponsors Office of Audit Services WA-24-0037 (W-00-24-35912) 2026