5 Policy Goals Driving PBM Reform Efforts

Pharmacy benefit managers (PBMs) have moved from behind-the-scenes intermediaries to central figures in the national drug pricing debate. Policy makers at both the federal and state levels are advancing reforms aimed at reshaping how PBMs operate in Medicare Part D and commercial markets. The reform environment has been defined not by a single sweeping statute but by a coordinated push toward transparency, incentive realignment, and structural oversight.

Here are 5 goals of ongoing measures to reform the way PBMs operate in the US health care system.

1. Increasing Pricing Transparency Across the Drug Supply Chain

The most consistent objective across reform proposals is greater transparency into PBM pricing practices. Policy makers have targeted spread pricing, rebate retention, administrative fees, and formulary placement decisions.^1-3

A recently passed spending bill includes amendments to the Consolidated Appropriations Act of 2026 impacting Medicare Part D, requiring expanded reporting to plan sponsors and regulators, including detailed data on rebates, fees, and pharmacy reimbursement methodologies.^2,3 Oversight authority rests largely with CMS, which is tasked with monitoring compliance and ensuring reporting accuracy.

These transparency provisions could reshape negotiations between manufacturers, PBMs, and pharmacies, which CMS historically would not interfere with. Enhanced audit rights and required disclosures may give plan sponsors clearer visibility into total drug spending and administrative costs.^2,4

The overarching policy intent is to reduce opacity in PBM-plan relationships and improve accountability in pricing arrangements.

2. Delinking PBM Compensation From Drug List Prices

A second major goal is restructuring how PBMs are compensated. Historically, PBM revenue models have relied in part on rebates negotiated from manufacturers, which are often tied to drug list prices.¹ Critics argue this structure may create incentives to prefer higher-list-price drugs with larger rebates over lower-cost alternatives.

Recent reforms aim to “delink” PBM compensation from drug prices by shifting toward flat administrative service fees.² This approach seeks to align PBM earnings with clearly defined services—such as claims processing, formulary management, and network contracting—rather than with rebate magnitude.

“What the law does now is it says no part of a PBM’s compensation can be derived from anything tied to the cost or the list price of the drug,” Jesse Dresser, Esq, partner in Frier Levitt’s Life Sciences Department, told The American Journal of Managed Care^® (AJMC^®) in an interview.⁴ “Things that are percentage-based arrangements, whether they be retaining a portion of the rebates or whether they be collecting a data fee or administrative fee that is tied to the price of the drug, can no longer be sources of revenue for either the PBMs or their affiliates, and the way that affiliate is defined is defined broadly enough to include rebate GPOs [group purchasing organizations] and rebate aggregators. That means that it’s going to radically change how PBMs can derive money in the Medicare Part D space.”

3. Ensuring Rebate Pass-Through and Accountability

Closely related to delinking is the goal of increasing rebate accountability. Reform initiatives emphasize requiring PBMs to pass manufacturer rebates directly to plan sponsors rather than retaining a portion.² Full rebate pass-through could promote clearer accounting and reduce hidden revenue streams.

These provisions are intended to enhance oversight and improve transparency between PBMs and plan sponsors.² However, while rebate pass-through may lower overall plan liability, it does not automatically translate to reduced point-of-sale costs for beneficiaries unless additional benefit design changes are implemented.¹ Even if rebates are fully passed through to plan sponsors under the new rules, the gap between list and net drug prices remains, Ge Bai, PhD, CPA, professor of accounting and health policy at Johns Hopkins University, explained in an interview with AJMC.⁵

“As long as we still have this close to a net price double, meaning that the list price of the drug is higher than the net price and there is a rebate in between, the rebate now is transferred from the PBMs to the plan sponsor 100%,” Bai said.⁵ “Although that's happening, we still have this gap, so a patient’s cost sharing based on the list price means patients probably won't see substantial savings just from the out-of-pocket perspective.”

4. Protecting Pharmacy Access and Network Participation

Another major policy objective centers on pharmacy access. Lawmakers have raised concerns about reimbursement pressure on independent pharmacies, network exclusion, and alleged anticompetitive practices.^4,6

The Consolidated Appropriations Act of 2026 includes provisions addressing network participation standards, contract transparency, and mechanisms for pharmacies to challenge reimbursement practices.⁴

“It redefines the relationship between PBMs [and] network pharmacies and, importantly, injects CMS into the middle to be sort of a standard setter and, in some instances, an arbiter of disputes between plan sponsors, PBMs, and network pharmacies,” Dresser explained.⁴ “There long had been a law in the books, the Any Willing Provider law, that essentially says any pharmacy willing and able to participate in terms and conditions applicable to other participating pharmacies must be allowed to participate. However, CMS hadn't really enforced that provision at all, and one of the things that was unclear was, do those terms and conditions have to be reasonable? Is there any standard of what those terms and conditions have to be?”

Ensuring fair contracting and reimbursement practices is a central theme in both federal and state-level reforms, and the recently passed legislation provides pharmacies a pathway to inform CMS when they feel terms and conditions are not reasonable.⁴

5. Addressing Vertical Integration and Market Consolidation

Beyond operational reforms, lawmakers are increasingly scrutinizing vertical integration across insurers, PBMs, and affiliated pharmacies. Bipartisan proposals seek to examine whether consolidated entities may exert outsized influence over formulary design, specialty pharmacy steering, and reimbursement structures.⁶ The recently introduced Break Up Big Medicine Act aims to prohibit the joint ownership of health insurers, PBMs, providers, and wholesalers to address vertical integration in the industry.⁷

Concerns include potential conflicts of interest when PBMs favor affiliated pharmacies or when consolidation limits independent pharmacy participation. While not all structural reform proposals have advanced into law, continued congressional attention has increased regulatory pressure in this area.⁶

Goals of PBM Reform Initiatives

Collectively, current PBM reform initiatives reflect a coordinated effort to enhance accountability in drug benefit management. Transparency mandates, delinking compensation models, rebate pass-through requirements, pharmacy access protections, and scrutiny of vertical integration are shaping the regulatory trajectory.

Although implementation timelines and enforcement details continue to evolve, PBMs will likely operate under increasing disclosure requirements and regulatory oversight.

References

1. Freed M, Cubanski J, Williams E, Pestaina K. What to know about pharmacy benefit managers (PBMs) and federal efforts at regulation. KFF. February 9, 2024. Accessed February 20, 2026. https://www.kff.org/other-health/what-to-know-about-pharmacy-benefit-managers-pbms-and-federal-efforts-at-regulation/

2. McCrear S. PBM reforms signed into law reshaping Medicare Part D drug pricing transparency. AJMC. February 3, 2026. Accessed February 20, 2026. https://www.ajmc.com/view/pbm-reforms-signed-into-law-reshaping-medicare-part-d-drug-pricing-transparency

3. Bonavitacola J. New legislation aims to address transparency in PBMs as first major step in reform. AJMC. February 10, 2026. Accessed February 20, 2026. https://www.ajmc.com/view/new-legislation-aims-to-address-transparency-in-pbms-as-first-major-step-in-reform

4. Bonavitacola J, Dresser J. New regulations on PBMs become law: what this means for pharmacies nationwide—a Q&A with Jesse Dresser, Esq. AJMC. February 4, 2026. Accessed February 20, 2026. https://www.ajmc.com/view/new-regulations-on-pbms-become-law-what-this-means-for-pharmacies-nationwide-a-q-a-with-jesse-dresser-esq

5. Steinzor P. PBM reforms in new bill may not lower drug costs for patients. AJMC. February 17, 2026. Accessed February 20, 2026. https://www.ajmc.com/view/pbm-reforms-in-new-bill-may-not-lower-drug-costs-for-patients

6. Roberts B. U.S. House passes PBM reforms: where are we now? American Legislative Exchange Council. February 2, 2026. Accessed February 20, 2026. https://alec.org/article/u-s-house-passes-pbm-reforms-where-are-we-now

7. McNulty R. Bipartisan Break Up Big Medicine Act targets vertical integration in health care. AJMC. February 12, 2026. Accessed February 20, 2026. https://www.ajmc.com/view/bipartisan-break-up-big-medicine-act-targets-vertical-integration-in-health-care