Analysis of Title VII: Lowering Prescription Drug Costs & Other Related Provisions

OVERVIEW

The Great Health Care Plan[1], introduced by the Trump Administration, fundamentally supports 1) giving Americans their health dollars, 2) giving Americans transparency into costs, and 3) giving Americans more options for how to pay for their healthcare. Title VII in H.R. 7148 and other related healthcare provisions in this bill that passed the House on January 22, 2026, achieve many of the goals outlined in President Trump’s plan.

Putting Patients Before Middlemen: PBM Reforms

Employers often provide healthcare benefits to their employees, commonly referred to as an “employee welfare benefit plan.” These benefit plans, like group health plans, are subject to requirements under the Employee Retirement Income Security Act of 1974 (ERISA) to protect the fidelity of the benefit (often referred to as the employer’s fiduciary duty).

Companies who offer group health plans to employees have significant statutory flexibility when designing the benefit – it is, in fact, a benefit for employee recruitment and retention. Yet, these group health plans often face anti-competitive behavior by service providers who refuse to provide the group health plan with transparency, information, or data that legally belongs to the group health plan, not to the service provider. An individual designated by the plan sponsor is appointed to receive cost and claim data for the purpose of designing the health benefit. This individual is bound by strict requirements under the Health Information Portability and Accountability Act (HIPAA) to safeguard personal health information that exists within the cost and claim data. Without this data, group health plans lack the transparency needed to best negotiate down health costs for employees. Instead, employers are in the dark about their health costs, like one example at Johnson & Johnson, where the lack of transparency, as referenced in AFPI’s research report on Pharmacy Benefit Managers (PBMs)[2], left the company paying $10,239.69 for a drug that cost $40.55.

PBMs use rebates to give group health plans discounts on prescription drugs. For instance, if a group health plan puts a certain drug on a preferred place on the formulary, the drug will have a greater rebate. The assumption is that preferential treatment on the formulary will result in greater volume, which in turn leads to a greater rebate. However, as pharmacy benefit management services have evolved, these companies have used other entities like rebate aggregators to maximize rebates from pharmaceutical manufacturers. These rebates pass through various entities before coming to the group health plan, and the full amount is sometimes a mystery to the group health plan.

• Oversight of Pharmacy Benefit Management Services. Two and a half years after enactment of § 6701 of the bill, PBMs will be required to provide an itemized receipt of the care purchased by the group health plan, at least twice a year.

The receipt has to include basic information, such as how much the group health plan spent on the drugs, how many drugs the plan purchased, how much of a discount the group health plan got (e.g., less rebates and other discounts), what pharmacy was preferred, the formulary that was used, and a summary document of the information (i.e., an itemized receipt and a general receipt). Group health plans are also no longer prevented from being able to use this information to shop around for other PBM services. Patients will be able to access a version of this information, including whether the group health plan used spread pricing to price their drug.

PBMs will also have to report other remuneration that might influence the decision-making of agents, brokers, or group health plan consultants when working with companies to design care. For example, if a consulting firm or brokerage firm gets a percentage from the PBM every time they sell a certain plan design to a group health plan, this remuneration will have to be reported as part of the receipt. Not only that, but PBMs will have to report any anti-competitive arrangements with pharmacies that they own.

This provision also includes regulatory flexibility for employers who do not contract PBM service separately and instead use an insurance provider to fully insure their employees (rather than self-fund).

• Full Rebate Pass Through to Plan; Exception for Innocent Plan Fiduciaries. Employers are required to fulfill their fiduciary duty to their employees: protecting the fidelity of the benefit they are providing for their employees. ERISA is explicit about what is and is not a violation of fiduciary duty and lists prohibited transactions and allowable exemptions. Conversely, § 6702 provision of the bill amends the list of allowable exemptions. For example, if a group health plan and their service provider want to use rebates, the only allowable way to do so while fulfilling their fiduciary obligation is by passing through 100% of the rebate to the group health plan. This includes any portion of the rebate that is handled by a rebate aggregator or a service provider of the PBM itself. Additionally, the section further clarifies that PBMs are included in the list of services that must disclose kickbacks when they do business with the group health plan. Lastly, the section closes a loophole to ensure that group health plans can hold PBMs liable when they violate their fiduciary obligations. Fundamentally, the PBM can no longer hide discounts from the group health plan.

• Modernizing and Ensuring PBM Accountability. Like the requirements between group health plans and their service providers, § 6224 applies the same requirements of transparency and rebate pass through to the PBMs providing services to seniors on Medicare.

Cheaper Drugs: Ending Anti-Competitive Practices by Big Pharma

Manufacturers of generic drugs face hurdles when attempting to obtain cheaper forms of brand-name drugs to market. These drugs are both quantitatively and qualitatively the same as their brand-name counterpart, but the generic manufacturer often must engage in a drawn-out guessing game with FDA to prove it. Because of these inefficiencies, generic drug approvals are significantly delayed, keeping affordable alternatives away from patients

• Increasing Transparency in Generic Drug Applications (Q1/Q2). § 6703 of the bill cuts through the red tape at the Food and Drug Administration (FDA), allowing the regulators to disclose specific pieces of information to generic drug manufacturers who have submitted an Abbreviated New Drug Application (ANDA). The drug manufacturers can then ensure that the generic version of the drug is both quantitatively and qualitatively the same version as the brand-name equivalent.

Ending Dishonest Billing: Decreasing Costs at the Doctor’s Office

Dishonest medical billing occurs when an off-campus physician practices within a hospital system falsely claims to be a hospital for the purpose of billing the insurer. When a healthcare facility bills a patient’s insurer, the facility must report a federally required National Provider Identifier (NPI) number on the claim form to identify where the care took place. When a patient visits a physician office that is owned by a large hospital system, the system will often bill the patient by using the NPI number of one of its hospitals.

• Requiring a Separate Identification Number and an Attestation for Each Off-Campus Outpatient Department of a Provider. § 6225 of the bill requires hospital-owned off-campus outpatient departments to obtain their own NPI number, rather than billing under the hospital’s main NPI number.

[1] See The White House. (2026, January). The Great Healthcare Plan

[2] See Center for a Healthy America. (2024, November 22). Middlemen Favor Unaffordable Drugs