For years, Congress has signaled that it wants to crack down on Pharmacy Benefit Managers, the middle men that have come under fire for their vertical integration with insurers and their role in spiking drug costs.
This week, it finally happened via the Consolidated Appropriations Act of 2026, prompting employer groups including the Purchaser Business Group on Health (PBGH) and the ERISA Industry Committee to cheer its passage.
“Taken together, the bipartisan health care reforms in this law will lower health care costs for employers and employees alike, introduce new accountability for PBMs, and will deliver purchasers an unprecedented amount of transparency into their pharmacy benefit plan,” according to a statement from PBGH.
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But the reality is more complicated. While it is true that there were major gains made by employers, one of the most significant parts of the law — the delinking of PBM compensation from the price of a drug in Medicare Part D — eluded employer groups. This is a provision in the new law that only applies to Medicare Part D, according to Jesse Dresser, a partner in Frier Levitt’s Life Sciences Department.
In Medicare Part D, spread pricing was also prohibited as PBMs will no longer be able to derive any revenue tied to the cost of the drug, Dresser stated. Spread pricing occurs when a PBM charges a health plan more for a drug than it pays the pharmacy and keeps the difference as profit. The changes will take effect in 2028.
Employers, meanwhile, didn’t get a ban on spread pricing, noted Shawn Gremminger, president and CEO of the National Alliance of Healthcare Purchaser Coalitions. Neither did they get the “longshot ask” of making PBMs fiduciaries to their clients, which would require PBMs to act in the best financial interest of employers.
Still, this shouldn’t diminish what the law achieves, as it is a “big deal and will meaningfully change the way PBMs operate in the commercial space,” Gremminger said.
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If delinking from list price, a ban on spread pricing and PBMs not becoming fiduciaries to customers ultimately failed in the final passage, what gains were made?
What the law does include for employers is a requirement for PBMs to provide more detailed reporting to plan sponsors, such as a list of covered drugs dispensed, prescriptions dispensed by affiliated pharmacies and information on biologics and biosimilars. In addition, PBMs are mandated to pass along all rebates, discounts, fees and other payments they receive on drugs directly to employers or group health plans.
“After eight years, ERIC-led reforms to the PBM industry that instill greater accountability and transparency made it across the goal line, and the result will be lower drug costs for more than 160 million Americans who get their health insurance through a job,” said James Gelfand, president and CEO of the ERISA Industry Committee, in a statement.
This does put PBMs on the road to greater transparency, but the battle is not won.
As Wendell Potter pointed out in his newsletter, employers may actually get some of what they want via a rule the Department of Labor recently proposed. The rule would require PBMs to disclose all rebates and other payments from manufacturers to employer-sponsored health plan fiduciaries, including any compensation tied to the difference between plan payments and pharmacy reimbursements. It also allows fiduciaries to audit these disclosures and provides protections if PBMs fail to comply.
“With the new Consolidated Appropriations Act of 2026, along with the Department of Labor’s proposed regulation, I do think that there will be some more protection, more relief aimed at compelling disclosure of certain information,” Dresser said.
However, according to Gremminger, while the Department of Labor’s proposed rule and the Consolidated Appropriations Act of 2026 give purchasers “unprecedented transparency” into PBMs, employers still won’t have everything they’re looking for.
“Even after both the regulation and the law are implemented, PBMs will still be allowed to engage in spread pricing and link their fees to the price of drugs in the commercial market. PBMs will still not be statutory fiduciaries,” Gremminger said. “The events of the past week are a huge leap forward, but much more needs to be done.”
Dresser also noted that it’s possible that the Department of Labor’s proposed rule may change down the line, especially given the fact that it was released in the same week as the Consolidated Appropriations Act of 2026.
“Some of what they’re looking to do in the new regulations is already being directed by law and also calls for the enactment of regulations aimed at enforcing and implementing these new rules,” he said. “So I do think that there is a possibility that this particular iteration of the Department of Labor’s proposed regulation doesn’t go through, but instead it gets kind of converted into something that maybe more aligns with the recently enacted law.”
He added that it’s unlikely for future iterations of the DOL rule to include a ban on spread pricing, as this will likely need congressional action. However, it’s possible it could come from agency enforcement action. He pointed to the recent FTC settlement with Express Scripts over insulin, in which Express Scripts agreed to a series of changes, including moving away from a model that involves rebates.
Companies that serve employers are also applauding the efforts made to rein in PBMs, including Carrum Health.
“We are pleased to see these developments in the approach to PBM pricing and compensation as it will create more transparency for employers,” said Doug Cole, vice president of health plan partnerships at Carrum Health.
Meanwhile, AJ Loiacono, CEO of Judi Health (a tech-enabled PBM formerly Capital Rx), agrees that this is a major step forward, but acknowledges that more needs to be done. For example, the law doesn’t address PBMs steering patients to affiliated specialty pharmacies or vertical integration. Judi Health bills itself as a transparent PBM.
“When PBMs own mail-order and specialty pharmacies, they have financial incentives to steer patients toward those channels—often at higher cost to the plan. Greater transparency into affiliate pharmacy pricing and utilization is a great start, but structural separation may ultimately be needed,” he said.
In other words, Loiacono is suggesting that PBMs be broken up such that an insurance company, a PBM and a pharmacy don’t have the same corporate parent, as is the case with many large PBM players today. That may be the longest shot of them all.
Photo: cagkansayin, Getty Images