PBM Reforms in New Bill May Not Lower Drug Costs for Patients

The Consolidated Appropriations Act of 2026, which calls for increased transparency and reshapes how pharmacy benefit managers (PBMs) are paid, is being hailed as an important first step in PBM reform.¹ Yet patients may not see significant reductions in out-of-pocket drug costs in the near term, according to Ge Bai, PhD, CPA, professor of accounting and health policy at Johns Hopkins University.

In an interview with The American Journal of Managed Care^® (AJMC^®), Bai said the bill addresses long-standing concerns about opaque PBM business practices and misaligned incentives in both Medicare Part D and commercial markets. However, she emphasized that the legislation largely fine-tunes existing structures rather than transforming the economic forces that drive high drug prices and pharmacy benefit spending.

Key PBM Changes in Medicare Part D and Commercial Markets

The new law, passed as part of a broader spending package, overhauls how PBMs are paid in Medicare Part D by delinking their compensation from drug list prices and rebates and shifting them to flat administrative fees.²

In Medicare Part D, the bill also strengthens oversight by adding enhanced reporting requirements and expanded audit rights for plan sponsors, alongside an any-willing-pharmacy provision that widens pharmacies’ ability to contract with PBMs in Part D, explains Bai.

“There are some transparency requirements; you have to do semi-annual reporting,” said Bai. “PBMs must give the report to the plan sponsors, and there's an audit provision saying that the plan sponsors now have expanded authority to audit the PBMs. All these expanded rights did not exist before this bill.”

In the commercial market, PBMs must now pass through 100% of rebates and other remuneration to payers and comply with robust new transparency and reporting rules enforced by CMS, which can penalize noncompliance—changes aimed at curbing opaque pricing practices and laying groundwork for more accountable drug pricing.²

Why Patients May Not See Lower Out-of-Pocket Costs

However, a central limitation is that patient cost sharing continues to be based on the list price, not the net price after rebates, noted Bai. Even if rebates are fully passed through to plan sponsors under the new rules, the gap between list and net prices remains.

“As long as we still have this gross-to-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%,” said Bai. “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.”

Plan sponsors have historically relied on rebate checks from PBMs to dampen overall medical spending and help stabilize premiums. Because PBMs will no longer profit directly from larger rebates, Bai expects they may care less about maximizing rebate size. Smaller or less robust rebates could reduce the financial cushion for plan sponsors, potentially putting upward pressure on premiums or other costs.

Any-Willing-Pharmacy and Supply Chain Dynamics

The any-willing-pharmacy provision also alters negotiating dynamics. Previously, PBMs and insurers could use the threat of network exclusion to secure better terms from pharmacies.

“PBMs do not have the right to kick out anybody, which weakens the PBMs’ leverage, so they can no longer negotiate as effectively as before with pharmacies,” said Bai. “That's good news for pharmacies, but at the same time, when you weaken the PBMs, the plan sponsors and the patients will have to anticipate a higher price from the pharmacies.”

Therefore, weakening one stakeholder does not necessarily mean more money will go to plan sponsors and patients, because savings can easily shift to other players rather than reaching the end consumer.

Competition, Not Regulation Alone, as the Long-Term Solution

Looking beyond this first major legislative step, Bai argued that limited competition is the fundamental driver of high health care prices and poor affordability.

While she described the PBM transparency legislation as a well-intentioned and meaningful first move toward reform, Bai stressed that durable relief for patients will likely depend on fostering competition and transparency across the broader health care market, not solely on tightening PBM oversight.

Instead, Bai calls for reforms that give patients more control over their health care dollars, allow insurers greater flexibility to design benefit plans that consumers actually want, and lower regulatory barriers so smaller providers and organizations can enter and compete on a level playing field.

“The lack of competition is the root cause of the high price or unaffordability [in the] health care market,” said Bai. “And the root cause for this lack of competition is too many regulations and the too stringent environments that only the big ones [companies] can survive.”

References

1. Bonavitacola J. New legislation aims to address transparency in PBMs as first major step in reform. AJMC. February 10, 2026. Accessed February 17, 2026. https://www.ajmc.com/view/new-legislation-aims-to-address-transparency-in-pbms-as-first-major-step-in-reform

2. McCrear S. PBM reforms signed into law, reshaping Medicare Part D drug pricing transparency. AJMC. February 2, 2026. Accessed February 17, 2026. https://www.ajmc.com/view/pbm-reforms-signed-into-law-reshaping-medicare-part-d-drug-pricing-transparency