Industry Input Sought on Reasonable and Relevant Pharmacy Contract Terms

What are “reasonable and relevant” terms for pharmacy network contracting? A Request for Information (RFI) from the Centers for Medicaid & Medicaid Services (CMS), Department of Health and Human Services (HHS) invites comment on the standards for reasonable and relevant pharmacy network contract terms and conditions that apply to a pharmacy exercising its “any willing pharmacy” right to participate in the pharmacy network of a Medicare Part D plan. 

This RFI was issued in connection with a rulemaking mandated by Section 6223(a) of the Consolidated Appropriations Act, 2026 (Pub. L. No. 119-75). That provision modified the statutory requirement that all Medicare Part D plan sponsors permit any pharmacy that meets standard contract terms and conditions to participate as a network pharmacy of the plan by requiring that the contract terms must be reasonable and relevant, according to standards established by HHS. HHS is required to establish the standards by April 2028, and the new requirements apply to contracts for plan years beginning on or after January 1, 2029. 

This is an important opportunity to engage with CMS on many critical issues, including various pharmacy benefit manager (PBM) contract terms and business practices that pharmacies have raised as negatively affecting their business. Comments to the RFI, published in the Federal Register today, are due by November 23. 

What information is sought?

CMS is seeking information from stakeholders, including plan sponsors, PBMs, and pharmacies, to determine what should constitute reasonable and relevant contract terms. 

CMS identifies eight primary categories of information: 

• Information about the sufficiency of pharmacy reimbursement and dispensing fees

• Current network contracting practices

• Trends in contract terms and conditions

• Pharmacy quality and performance measures

• Plan auditing practices

• Any limitations or restrictions on Part D dispensing by plan sponsors

• Existing guidance or regulations on the topics that may require clarification

• Any operational considerations or documentation needed to implement standards

The RFI specifically notes concerns about the sufficiency of pharmacy reimbursement and dispensing fees, which is a key issue for stakeholders. CMS seeks information about whether pharmacy reimbursement and dispensing fees “sufficiently cover the ingredient and operational costs of such pharmacies.” The RFI addresses a range of PBM practices and raises whether CMS should establish reimbursement methodologies or rates through this process. 

CMS asks commenters for detailed responses, which may include quantitative data and empirical analyses, contract language (de-identified as appropriate), along with the geographic location and any concerns with vertical integration. 

What does this mean for the industry?

The CAA required that CMS issue an RFI to inform its rulemaking regarding the standards. Now that the RFI is here, we know CMS has expressed interest in issues of high importance to the industry. CMS has also opened a range of possibilities, including considering specific contract terms and enforcement mechanisms that may meaningfully affect key issues for pharmacies’ business operations.   

The RFI provides pharmacies, Part D plan sponsors, and other industry stakeholders with an opportunity to try to help craft the forthcoming regulation and ensure accounting for important considerations, which we expect to vary depending on the industry sector providing comments. 

If you have any questions about this RFI or would like to consider submitting comments, please do not hesitate to reach out to the authors of this post or to health care lawyers at Reed Smith.