Rebates, Reference Pricing, and the Road to 2026 Midterms

The 2026 midterm elections are less than 6 months away, and the health care policy landscape has rarely looked more unsettled. In a session at Asembia’s AXS26 Summit, experts Lisa Joldersma, senior advisor, Avalere Health; Mike Ciarametaro, managing director, Avalere Health; and Mina Allo, managing director, Avalere Health, shared insights on the cascade of regulatory, legislative, and market forces now converging on drug pricing, pharmacy benefit manager (PBM) operations, and global launch strategy.

PBM Reform: Progress, Loopholes, and a Fundamental Contradiction

Joldersma opened with a tour of what she called “significant activity” in PBM regulation over the past 6 months, introducing 3 federal developments that are reshaping the landscape simultaneously.

First, the Federal Trade Commission (FTC) reached a voluntary settlement with Express Scripts (ESI), and CVS Caremark has indicated it has reached preliminary settlement terms—though those terms remain redacted. The settlements require extensive data reporting to plan sponsors, mandate fee-based rather than rebate-linked compensation, restrict spread pricing, and add a requirement for mandatory reshoring of offshore group purchasing organization operations.

“These, I would characterize as settlement terms that really kind of read the room and understand what people were calling for,” said Joldersma. “With one big caveat, which is that there was an out.”

That “out” is a provision allowing employer plan sponsors to opt out of the standard offering and continue prior arrangements, which emerged as a central point of discussion. Allo noted that the FTC settlement also required ESI to spend $10 million marketing the standard offering to encourage adoption and flagged the asymmetry now embedded in the reform architecture: FTC delinking applies to the commercial market, while the Consolidated Appropriations Act (CAA) of 2026 delinking applies specifically to Medicare.

“Watching the employer market evolve from high rack, high rebate, to the lowest net cost is something that will be monitored pretty closely,” said Allo.

The second pillar is the Department of Labor’s (DOL) proposed rule—more than a decade in the making—requiring Employee Retirement Income Security Act of 1974 (ERISA) plan sponsors to disclose PBM compensation arrangements.

“I want to be clear that this rule, as proposed, does not require rebate pass-through, but it is structured in such a way that the purchaser—the ERISA plan sponsor—is going to see all that information and is going to have to be able to sort of justify, in its own mind, and potentially to the DOL or to its plan members, how a PBM retaining pieces of rebates is in their best interest,” said Joldersma.

The third pillar—the CAA of 2026—addresses the gaps left by the other 2. It prohibits PBMs operating in Medicare Part D from receiving price-linked compensation, mandates rebate pass-through for ERISA plans, and explicitly classifies PBMs as covered service providers under ERISA, bolstering DOL’s rulemaking authority.

This aligns with broader legislative findings. In a session at the Academy of Managed Care Pharmacy (AMCP) 2026 meeting, experts explained that the CAA delinks PBM revenue from drug prices in Medicare Advantage, requiring compensation as flat-dollar bona fide service fees—though notably, the widely anticipated Medicaid spread pricing ban did not survive the final legislation, as updated budget scoring rendered it a net cost.

“It is becoming increasingly difficult for me to reconcile how these pricing reforms can coexist with the PBM reforms,” said Joldersma. “We have sort of the PBM reforms that were crafted for one sort of pricing and product framework, and that's changing, but you look at something like MFP [Maximum Fair Price] or the underpayment limits in states that are talking about how to effectuate them. They're very reliant on rebate-type arrangements, and yet, PBM reform is trying to discourage rebates going forward. To me, that suggests we’re not done yet with PBM reform in particular.”

Drug Pricing: MFN, IRA, and the Looming Election Calculus

Ciarametaro mapped the drug pricing regulatory landscape across all 3 branches of government. On the administrative side, the Trump administration has advanced Most Favored Nation (MFN) pricing through both the Global Benchmark for Efficient Drug Pricing (GLOBE) and Guarding US Medicare Against Rising Drug Costs (GUARD) regulatory initiatives and an effort to codify MFN agreements into statute via reconciliation.

“There's not enough support to really pass that through Congress, and there's a lack of willingness on the Democratic side to give the Republicans a victory moving into midterms,” said Ciarametaro.

The administration also announced 100% tariffs on patented pharmaceuticals manufactured outside the US, with exemptions for manufacturers holding MFN agreements, those committing to partial onshoring, and generics and orphan drugs. But Ciarametaro flagged a significant ambiguity: despite verbal assurances of exemptions, the initial GLOBE/GUARD guidance contains no such exemption language, and SEC [Securities and Exchange Commission] filings from manufacturers suggest agreement durations of 3 years vs the 5-year term referenced in regulatory guidance.

“The most significant thing is, how do manufacturers that aren’t included as part of those deals—how are they going to react?” asked Ciarametaro. “That is probably the single biggest driver of determining whether this moves forward in a timely fashion or not.”

On the Inflation Reduction Act (IRA) front, 2028 negotiations are underway, marking the first time Medicare Part B products—primarily immunology drugs—are included. CMS guidance for the 2029 cycle, particularly around the “qualified single source” definition for products with bioavailability-enhancing active ingredients, remains a critical open question. Ciarametaro noted the financial complexity: for many such products, intravenous biosimilars are entering the market, creating incentives for CMS to remove them from negotiation eligibility.

Looking at the post-midterm legislative landscape, Ciarametaro operates under the working assumption of a divided Congress—a Democratic House and a Republican Senate—which will constrain major legislation through 2027. Democratic platforms are expected to build on the IRA by reducing the spending threshold for drug eligibility, shortening the 9- and 13-year small-molecule time-on-market provisions, and incorporating international reference pricing as one factor among many in IRA negotiations—a formulation designed to be more legally durable than a standalone MFN.

Market Strategy: Navigating an “Ambiguous Mess”

The session’s final segment turned to practical strategy. Allo addressed the ripple effects across the drug channel, noting that spread pricing reform, while focused on retail and independent pharmacies, does not yet apply to specialty pharmacy. She highlighted the FTC’s requirement that ESI pay for nondispensing services such as medication therapy management, wellness screenings, and vaccinations:

“They call out something that was really music to my ears—nondispensing services that they’re mandating payment for, things like MTM [Medication Therapy Management], counseling, wellness, and screening, things that pharmacists have been trying to get appropriately reimbursed for many years,” said Allo.

Allo also flagged the accelerating consumerization of the drug channel—Amazon’s integration of One Medical telemedicine with its pharmacy platform and Walmart’s entry into the direct-to-consumer medication space—as developments to watch closely, particularly if they begin to expand beyond the glucagon-like peptide-1 market into specialty.

For manufacturers, Ciarametaro offered a framework for navigating what he called the “ambiguous mess” of pipeline and inline product decisions. The traditional model of treating US and ex-US development as independent tracks is no longer viable.

“You’re going to have to take a much more integrated development view of launching assets,” said Ciarametero. “Traditionally, the US has been its own thing, and ex-US has been its own thing. From a decision-making standpoint, you have to take a much more integrated view across markets.”

Specific strategies gaining traction include creating greater price separation between US and ex-US markets through contracting vehicles that obscure net prices from the US government, raising ex-US prices through outcomes-based contracting or subpopulation focus, and greater selectivity in geographic launch sequencing.

“The state side—it’s messy,” said Ciarametaro. “Everybody’s kind of doing their own thing. Companies are just going to, unfortunately, have to deploy more resources to manage that.”

As the midterms approach, the consensus from the session is clear: the policy environment is not simply dynamic—it is structurally unsettled, with PBM reforms, drug pricing rules, and global reference pricing initiatives pulling in directions that have yet to be reconciled. For manufacturers, payers, and pharmacy stakeholders alike, the next 18 months will demand not just monitoring, but active strategy development across a policy landscape that shows no signs of stabilizing.

References

1. Joldersma S, Allo M, Ciarametaro M. Healthcare and drug pricing at a crossroads: policy directions ahead of the midterms. Presented at: AXS26; April 27-30, 2026; Las Vegas, NV.

2. McCormick B. Health policy volatility, regulatory shifts shape outlook ahead of 2026 midterms. AJMC^®. April 15, 2026. Accessed April 27, 2026. https://www.ajmc.com/view/health-policy-volatility-regulatory-shifts-shape-outlook-ahead-of-2026-midterms