Bill Summary
The "Break Up Big Medicine Act" is legislation designed to address and prohibit anticompetitive ownership structures within the healthcare sector. It specifically targets the common ownership of healthcare providers, pharmacy benefit managers, and insurance companies, which has contributed to conflicts of interest and the consolidation of market power among large healthcare entities. The Act mandates that individuals or entities cannot simultaneously own or control both healthcare providers and insurance or pharmacy benefit management companies, requiring those in violation to divest one of the conflicting interests within one year of the law's enactment.
The legislation enhances enforcement capabilities by granting the Federal Trade Commission (FTC) and the Department of Justice (DOJ) authority to oversee compliance, impose penalties for non-compliance, and review the impact of divestitures on competition. It also allows state attorneys general and individuals harmed by violations to bring civil actions for damages. Through these measures, the Act aims to promote fair competition, protect consumer welfare, and reduce the influence of vertically integrated healthcare systems that may harm patient care.
Possible Impacts
The "Break Up Big Medicine Act" will have several significant effects on people, including:
1. **Increased Access to Healthcare Choices**: The legislation aims to dismantle the monopolistic practices of large, vertically integrated healthcare entities. By prohibiting common ownership between pharmacy benefit managers, insurers, and medical service providers, patients will benefit from a more competitive market. This increased competition is likely to lead to a broader range of healthcare options, better pricing, and improved availability of services, ultimately enhancing patient choice and care.
2. **Protection Against Conflicts of Interest**: With the Act's enforcement of divestment requirements, the potential for conflicts of interest that arise from corporate ownership structures will be reduced. Patients will have greater confidence that their healthcare providers can make decisions based solely on their medical needs rather than financial incentives tied to pharmacy benefit managers or insurers. This change is expected to foster more transparent and ethical healthcare practices.
3. **Enhanced Legal Recourse for Violations**: The legislation empowers individuals and state authorities to take civil action against entities that violate the ownership prohibitions. This means that if patients or providers believe they have been harmed by anticompetitive practices, they can seek legal remedies, including treble damages. This enhanced enforcement mechanism provides a stronger safety net for consumers, encouraging accountability among healthcare providers and insurers.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 3822 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
2d Session
S. 3822
To prohibit pharmacy benefit managers, insurers, and prescription drug
or medical device wholesalers from being under common ownership with
certain medical service providers, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 10, 2026
Ms. Warren (for herself and Mr. Hawley) introduced the following bill;
which was read twice and referred to the Committee on the Judiciary
_______________________________________________________________________
A BILL
To prohibit pharmacy benefit managers, insurers, and prescription drug
or medical device wholesalers from being under common ownership with
certain medical service providers, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Break Up Big Medicine Act''.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) Large, vertically integrated health care platforms
dominate the American health care system. These corporate
entities own or control every part of the health care supply
chain, including upstream business lines, like health insurance
plans, and downstream suppliers, like pharmacies and
physicians. This is the end result of an unprecedented wave of
consolidation.
(2) Large, publicly traded insurance conglomerates have
increasingly engaged in aggressive acquisition strategies,
becoming some of the largest employers of physicians in the
country. As of 2023, one conglomerate controls approximately 10
percent of all American physicians, making it the single
largest employer of physicians in the nation.
(3) More than three-quarters of all American doctors are
employed by corporate entities, with independent physicians
comprising a small and shrinking share of America's doctors.
(4) Large wholesalers of drugs and medical devices have
similarly engaged in a wave of consolidation. The 3 largest
drug wholesalers control 98 percent of the United States drug
distribution market. These conglomerates have also engaged in
substantial vertical integration, acquiring downstream
suppliers including specialty medical practices and medical
supply distributors. Since January 2024, the 3 largest drug
wholesalers have proposed or completed acquisitions of
downstream suppliers worth approximately $16,000,000,000 and
spanning more than 1,000 locations across 35 States.
(5) Pharmacy benefit managers are corporate entities that
determine what drugs will be covered by health plans, what
prices patients will pay, and how much pharmacies will be
reimbursed. The 3 largest pharmacy benefit managers are each
integrated into large, corporate health care platforms. These 3
pharmacy benefit managers alone process nearly 80 percent of
prescription drug claims.
(6) Ownership of both upstream and downstream businesses
creates inherent conflicts of interest for corporate health
care platforms.
(A) The Federal Trade Commission has found that
vertically integrated pharmacy benefit managers have
both the ability and incentive to steer business to
their own affiliated pharmacies, which reduces
competition and increases prescription drug costs for
patients.
(B) In the physician market, large insurers have
the ability and incentive to steer enrollees to
providers owned by the same parent company.
(C) Self-preferencing of affiliated pharmacies or
physicians may allow large, vertically integrated
health conglomerates to evade statutory limits on
profits known as the Medical Loss Ratio. Gaming of the
profit constraint using transfer pricing techniques may
allow affiliated health insurance businesses to hide
profits in the unregulated pharmacy or physician
business segments, costing enrollees and taxpayers
money.
(D) Extensive evidence supports claims that private
insurers issuing Medicare Advantage plans use employed
physicians to intensively document the medical
conditions of their enrollees, generating inflated
payments from the Federal Government without improving
care quality.
(E) In the wholesale drug distribution market,
acquisitions of specialty care providers by large
wholesalers can create the incentive and ability for
the new, vertically integrated company to steer
specialists toward prescribing the most lucrative drugs
and devices rather than the best treatment for the
patient.
(7) Pursuant to its powers under article I, section 8, of
the United States Constitution, Congress has the ability to
create any law necessary and appropriate to regulate interstate
commerce. Large, national health conglomerates operate across
state lines and engage in intrastate activities that
substantially relate to interstate commerce. Congress intends
to regulate these corporate health care platforms in the public
interest.
(8) In order to eliminate the conflicts of interest
described in paragraphs (1) through (7) and restore competition
to the marketplace, the Federal Government should--
(A) protect patients, physicians, pharmacies, and
taxpayers by structurally separating vertically
integrated health conglomerates;
(B) require parent companies that own an insurer or
pharmacy benefit manager to divest any medical
providers they either directly own or control through
management service organizations;
(C) require parent companies that own a
prescription drug or medical device wholesaler to
divest any medical provider or management service
organizations they own;
(D) enable Federal agencies, State attorneys
general, and private citizens to bring civil actions to
enforce the structural separation of these companies;
and
(E) grant the Federal Trade Commission and
Department of Justice additional authority to review
and block future actions that would harm the public
interest by re-creating the conflicts of interest
described above.
SEC. 3. PROHIBITIONS RELATING TO ANTICOMPETITIVE OWNERSHIP AND
CONTRACTS.
(a) Prohibition on Certain Common Ownership.--
(1) Involving an insurance company or pharmacy benefit
manager.--
(A) In general.--It shall be unlawful for any
person to both--
(i) directly or indirectly own, operate,
control, or direct the operation of the whole
or any part of--
(I) a provider; or
(II) a management services
organization; and
(ii) directly or indirectly own, operate,
or control the whole or any part of--
(I) an insurance company; and
(II) a pharmacy benefit manager.
(B) Divestment.--Not later than 1 year after the
date of enactment of this Act, any person in violation
of subparagraph (A) shall divest one of the following:
(i) All entities described in subparagraph
(A)(i).
(ii) All entities described in subparagraph
(A)(ii).
(2) Involving a wholesaler.--
(A) In general.--It shall be unlawful for any
person to both--
(i) directly or indirectly own, operate,
control, or direct the operation of the whole
or any part of a provider or management
services organization; and
(ii) directly or indirectly own, operate,
or control the whole or any part of a
prescription drug or medical device wholesaler.
(B) Divestment.--Not later than 1 year after the
date of enactment of this Act, any person in violation
of subparagraph (A) shall divest one of the following:
(i) All entities described in subparagraph
(A)(i).
(ii) All entities described in subparagraph
(A)(ii).
(b) Antitrust Enforcement.--
(1) In general.--Both the Federal Trade Commission and the
Assistant Attorney General in charge of the Antitrust Division
shall have jurisdiction, jointly or separately, to enforce this
section.
(2) Penalties for failure to divest.--
(A) Guidance.--Not later than 30 days after the
date of enactment of this Act, the Chair of the Federal
Trade Commission and the Assistant Attorney General in
charge of the Antitrust Division shall issue guidance
specifying milestones for divestment within the
deadline under subsection (a).
(B) Penalties.--
(i) In general.--For any person that does
not comply with the milestones specified under
subparagraph (A), the Chair of the Federal
Trade Commission or the Assistant Attorney
General in charge of the Antitrust Division
shall cause 10 percent of the profits of the
person to be transferred into escrow on a
monthly basis, to be--
(I) returned to the person if
divestment occurs by the deadline under
subsection (a); or
(II) deposited into the fund
described in subsection (c)(7) if
divestment does not occur by the
deadline under subsection (a).
(C) Trustee.--If divestiture does not occur by the
deadline under subsection (a), a divestiture trustee
shall oversee the divestiture required under that
paragraph. The divestiture trustee shall have the
authority to sell the entity to which the divestiture
requirement applies.
(c) Civil Actions.--
(1) In general.--When the Inspector General of the
Department of Health and Human Services, the Assistant Attorney
General in charge of the Antitrust Division of the Department
of Justice, the Federal Trade Commission, or an attorney
general of a State has reason to believe that a person is in
violation of subsection (a), such Inspector General, Assistant
Attorney General, Federal Trade Commission or attorney general
of a State may bring a civil action in an appropriate district
court of the United States.
(2) Private right of action.--
(A) In general.--An individual alleging damages as
a result of a violation of this Act may bring a civil
action in any court of competent jurisdiction, State or
Federal.
(B) Relief.--In a civil action brought under
subparagraph (A) in which the plaintiff prevails, the
court may award--
(i) treble damages;
(ii) reasonable attorney's fees and
litigation costs; and
(iii) any other relief, including equitable
or declaratory relief, that the court
determines appropriate.
(3) Actions by state attorneys general.--If the attorney
general of a State has reason to believe that an interest of
the residents of the State has been or is being threatened or
adversely affected by a practice that violates subsection (a),
the attorney general of the State may, as parens patriae, bring
a civil action on behalf of the residents of the State in an
appropriate district court of the United States to obtain
appropriate relief, including monetary damages.
(4) Injunctive and equitable relief.--In any action
described in paragraph (1), (2), or (3), the applicable court,
on a finding that a person is in violation of subsection (a),
shall issue an order requiring such person--
(A) to cease and desist from such violation, and,
if applicable, divest an entity of such person in
accordance with paragraph (1)(B) or paragraph (2)(B) of
such subsection (a), as applicable; and
(B) to disgorge any revenue received from an entity
subject to divestment in accordance with such
subsection (a) for the period of such violation.
(5) Other relief.--In addition to any relief obtained under
paragraph (1), (2), (3), or (4), the court may grant any other
equitable relief necessary to redress and prevent recurrence of
the violation.
(6) Right to jury trial.--Either party, upon request, shall
have the right to a jury trial.
(7) Deposit.--Any revenue disgorged pursuant to an action
under paragraph (1) shall be deposited in a fund created by the
Federal Trade Commission and distributed by the Federal Trade
Commission to be put to use in the interest of serving the
health care needs of the harmed community, including consumers
overcharged for medical services at vertically integrated
health care conglomerates.
(d) FTC and DOJ Review.--
(1) Reporting required.--Any divestment of an entity
required under subsection (a) shall be reported to the Federal
Trade Commission and the Assistant Attorney General in charge
of the Antitrust Division of the Department of Justice under
section 7A of the Clayton Act (15 U.S.C. 18a) without respect
to the thresholds under subsection (a)(2) of that section.
(2) Tolling of divestment period during review.--The
divestment period under subsection (a) shall be tolled during
the pendency of any waiting period required under section 7A of
the Clayton Act (15 U.S.C. 18a).
(3) Review of effect of divestiture.--With respect to each
divestiture undertaken pursuant to subsection (a), in addition
to any applicable review under section 7A of the Clayton Act
(15 U.S.C. 18a), the Federal Trade Commission and the Assistant
Attorney General in charge of the Antitrust Division of the
Department of Justice shall review the effect on competition,
financial viability, and the public interest--
(A) of the divestiture; and
(B) of the subsequent acquisition of the divested
entity by the acquiring person.
(4) Blocking of actions.--The Federal Trade Commission and
the Assistant Attorney General in charge of the Antitrust
Division of the Department of Justice, jointly or separately,
may bring a civil action in any court of competent jurisdiction
to block any action that would harm competition to the
detriment of the public interest with respect to the conflicts
of interest described in subsection (a).
(e) Rulemaking Authority.--The Federal Trade Commission shall
promulgate rules to carry out this section. Such rules shall not
diminish any obligation under this section.
(f) Reports Required.--The Chair of the Federal Trade Commission
and the Assistant Attorney General in charge of the Antitrust Division
of the Department of Justice shall submit to the appropriate
congressional committees quarterly reports on compliance with this Act,
including the status of any divestitures required under this Act.
(g) Rule of Construction.--Nothing in this section shall be
construed to limit the authority of the Federal Trade Commission, the
Inspector General of the Department of Justice, the Department of
Health and Human Services, or the attorney general of a State under any
other provision of law.
(h) Severability.--If any provision of this Act or the application
thereof to any person or circumstance is held invalid, the remainder of
this Act, or the application of that provision to persons or
circumstances other than those as to which it is held invalid, shall
not be affected thereby.
(i) Definitions.--In this section:
(1) Drug; device.--The terms ``drug'' and ``device'' have
the meanings given those terms, respectively, in section 201 of
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321).
(2) Health plan.--The term ``health plan'' means any public
or private health insurance plan.
(3) Management services organization.--The term
``management services organization'' means an entity that has
entered into an agreement with a provider to furnish services
to such provider, including services relating to payroll, human
resources, employment screening, payer contracting, billing and
collection, coding, information technology services, patient
scheduling, property or equipment leasing, and administrative
or business services that do not constitute the practice of
medicine.
(4) Person.--The term ``person'' has the meaning given the
term in section 8 of the Sherman Act (15 U.S.C. 7).
(5) Pharmacy benefit manager.--The term ``pharmacy benefit
manager'' means any person, business, or other entity, such as
a third-party administrator, regardless of whether such person,
business, or entity identifies itself as a pharmacy benefit
manager, that, either directly or indirectly through an
intermediary (including an affiliate, subsidiary, or agent) or
an arrangement with a third party--
(A) acts as a negotiator of prices, rebates, fees,
or discounts for prescription drugs on behalf of a
health plan or health plan sponsor;
(B) contracts with pharmacies to create pharmacy
networks and designs and manages such networks; or
(C) manages or administers the prescription drug
benefits provided by a health plan, including the
processing and payment of claims for prescription
drugs, arranging alternative access to or funding for
prescription drugs, the performance of utilization
management services, including drug utilization review,
the processing of drug prior authorization requests,
the adjudication of appeals or grievances related to
the prescription drug benefit, contracting with network
pharmacies, controlling the cost of covered
prescription drugs, or the provision of related
services.
(6) Prescription drug.--The term ``prescription drug''
means a drug approved under section 505 of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 355) that is subject to
section 503(b)(1) of such Act (21 U.S.C. 353(b)(1)).
(7) Prescription drug or medical device wholesaler.--The
term ``prescription drug or medical device wholesaler''--
(A) means a person engaged in wholesale
distribution of a prescription drug or a device; and
(B) includes a parent (direct or indirect) of, a
subsidiary (direct or indirect, and partial or
complete) of, and any entity under the common control
or ownership of a person described in subparagraph (A).
(8) Provider.--The term ``provider'' means a practitioner
or entity the National Provider Institute registration of which
has 1 or more taxonomy codes under the National Uniform Claim
Committee (or subsequent organization), including any in-
patient or outpatient pharmacy, physician practice, ambulatory
surgery center, urgent care center, post-acute care facility,
home-health provider, or hospital.
(9) Wholesale distribution.--The term ``wholesale
distribution''--
(A) means a person engaged in the sale, purchase,
trade, delivery, handling, storage or receipt of a drug
or device by a person other than the consumer or
patient; and
(B) does not include--
(i) dispensing of a drug or device to a
consumer or patient by a person having a valid
license under State law to do so;
(ii) purchase, handling, storage, receipt,
or other acquisition of a drug or device by a
person having a valid license under State law
to dispense or administer drugs or devices or,
a hospital, pharmacy, or other health care
entity, for use by such person, hospital,
pharmacy, or other health care entity;
(iii) sale, purchase, trade, delivery,
handling, storage, or receipt of a drug or
device by a person holding an application
approved under section 505 or 515 of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C.
355, 360e) or section 351 of the Public Health
Service Act (42 U.S.C. 262) for such drug or
device, a co-licensed partner of any person
described in this clause, or an affiliate of
any person described in this clause;
(iv) possession by, receipt by, or transfer
to a--
(I) third-party logistics provider
that provides or coordinates
warehousing or other logistics services
in interstate commerce; or
(II) repackager who owns or
operates an establishment that repacks
and relabels drugs or devices for
further sale or distribution, provided
that such third-party logistics
provider or repackager does not take
ownership of the drug or device;
(v) possession by, receipt by, or transfer
to a common carrier that transports a drug or
device, provided that the common carrier does
not take ownership of the drug;
(vi) intracompany transfer of any drug or
device by an entity described in clause (i),
(ii), or (iii), including transfers between
affiliates thereof, or warehousing by such
person incidental to such intracompany
transfer; or
(vii) returns or reverse distribution by
any person described in clause (i), (ii),
(iii), (iv), or (v).
<all>