Under the Magnifying Glass: A Wave of Drug Price Transparency

Am J Manag Care. 2026;32(Spec. No. 6):eSP6-eSP9. https://doi.org/10.37765/ajmc.2026.89930

In the span of a single week in late January and early February 2026, 3 federal actions—by Congress, the Department of Labor (DOL), and the Federal Trade Commission (FTC)—brought transparency efforts to the forefront of drug pricing policy. Whereas recent reforms have centered on prices set by pharmaceutical companies, this new wave of provisions shifts the focus to the role of pharmacy benefit managers (PBMs). We examine the drug pricing issues that transparency policies aim to address, how they may accomplish those aims, and what conditions are necessary for their success.

Why Transparency?

Like most other developed countries, health insurance offered in the US typically includes prescription drugs, necessitating negotiations with pharmaceutical manufacturers and pharmacies over coverage and payment.¹ But unlike its peers, this negotiation function is fulfilled in the US through PBMs selected by health plan sponsors through the private market.

Under this system, the same drug often has multiple prices, and what consumers and health plans pay often appears to be driven by opaque processes. PBMs have come under increased scrutiny for allegations that they are using this lack of transparency for financial gain at the expense of plan sponsors and patients.² Concerns about their conduct include retaining manufacturer rebates that could otherwise reduce plan costs or patient cost sharing, paying pharmacies less than plans’ reimbursement for dispensed drugs (also known as “spread pricing”), using formulary designs that favor high-priced drugs with rebates over lower-cost alternatives, steering prescriptions toward PBM-affiliated pharmacies, and tying compensation structures to manufacturer-set list prices that inflate prescription drug spending.

What Do Recent Federal Actions Include?

Each of the 3 recent federal actions includes provisions that exemplify transparency policies responding to allegations against PBMs. The DOL’s proposed rule, announced on January 30, 2026, and titled “Improving Transparency into Pharmacy Benefit Manager Fee Disclosure,” requires that PBMs report information about how they make money from self-insured health plans, such as those provided by employers and unions.³ Among other things, the disclosures include rebates and payments from manufacturers, spread pricing revenues and payments clawed back from pharmacies, and net costs of covered drugs. PBM-affiliated brokers and consultants must also disclose referral fees and compensation. The Consolidated Appropriations Act of 2026 (CAA), enacted February 3, creates similar reporting requirements for self-insured plans and extends them to other entities, such as third-party administrators and stop-loss carriers.⁴ It also establishes analogous standards for PBM disclosure to Medicare Part D and Medicare Advantage plan sponsors. Finally, on February 4, the FTC announced that Express Scripts, one of the nation’s 3 largest PBMs, had agreed to a consent decree that included commitments to provide drug-level cost reporting to plan sponsors.⁵

What Are the Transparency Aims?

Transparency provisions rest on the idea that providing payers with information can discipline the market for prescription drug benefits through a combination of improved purchasing decisions and greater accountability.⁶ When buyers know prices, they can better compare benefits options and choose lower-cost alternatives, exerting competitive pressure that drives prices down. The disclosure requirements of the CAA, DOL proposed rule, and FTC settlement all aim to provide information directly to plan sponsors or their fiduciaries, which should allow them to pit PBMs against each other for their business. Several provisions, such as the DOL proposal to require disclosure of PBM revenues from manufacturers, go further by also requiring that PBMs show plan sponsors potential financial conflicts of interest. These disclosures should, at least in theory, give plans the ability to identify and rein in misbehavior driven by profit motives.

Under What Conditions Will the Transparency Aims Be Achieved?

Four aspects shape the conditions under which transparency is likely to be effective, and they can indicate where additional policy supports may be needed to achieve the desired outcomes.

First, plan sponsors must understand the information to use it. This may be easier said than done. For example, drug-specific data may pose challenges because plan sponsors manage coverage for a wide range of products. Plan sponsors must analyze spending based on PBM contracts that establish net prices across hundreds of different products and are influenced by manufacturer rebates as well as pharmacy and PBM compensation. Large self-insured employers may have dedicated benefits teams or consultants to handle the analytical demands of making projections across their plan members. However, smaller employers represent a growing share of self-insured plans and typically lack a dedicated benefits infrastructure.⁷

A second consideration is whether plan sponsors can change their purchasing behavior in response to the information: To stir competition, they must have choices. Price transparency among generic drugs offers a compelling example, as many generics have numerous competing manufacturers offering the same product. Private market solutions such as Cost Plus Drugs have successfully demonstrated that transparent, cost-plus pricing can attract both individual consumers and institutional purchasers.⁸ This model does not include intermediaries like PBMs and instead charges patients the acquisition cost of the drug plus a transparent set of markups and fees. In the past several years, major PBMs and their affiliated pharmacies have responded to the competition by introducing their own versions of cost-plus pricing.

The same does not hold for branded drugs, where a single manufacturer holds a legal monopoly on the rights to market a product. Self-insured plan sponsors and Medicare Part D plans unaffiliated with a PBM are too small to negotiate major price concessions from manufacturers on their own, so they rely on PBMs to aggregate their negotiating power. Larger PBMs have greater bargaining leverage that can in turn lead to larger rebates from manufacturers. But this comes at a cost to plans: PBMs can control how much of these rebates they share. Market consolidation has left plan sponsors with few competing options: The 4 largest PBMs hold roughly 70% of the commercial PBM market for core services, and approximately 80% of regional PBM markets can be classified as highly concentrated under federal antitrust guidelines.^9,10

Where the ability to discipline the market through informed purchasing is limited, transparency efforts can be coupled with enforcement. This is central to policies focused on accountability, which combine transparency with the threat of discovery through audits and monitoring. All 3 federal actions confer audit rights to plan sponsors; the FTC additionally requires an independent third party to monitor Express Scripts’ compliance with its consent decree.

The effectiveness of this coupling depends on a third consideration: Can the party with the information enforce accountability? PBMs know that plan sponsors lacking the resources to interpret complex pricing data and the market power to switch PBMs are also unlikely to pay for audits or pursue costly legal action. Even when audit rights reveal noncompliance, the practical calculus of litigation may limit incentives to act.

A more credible threat of consequences comes from federal enforcement. Federal agencies have legal authorities and institutional resources that individual plan sponsors lack. The FTC’s requirement for a third-party monitor in its agreement with Express Scripts features the most concrete enforcement mechanism, whereas the CAA and the DOL proposed rule are more limited in scope. They rely instead on plan sponsors to identify and respond to misconduct that triggers monetary penalties for PBMs.

Successful enforcement also depends on whether rules can be circumvented through new accounting practices or legal arrangements between subsidiaries of the same vertically integrated parent company.¹¹ Between 2019 and 2021, each of the 3 largest PBMs launched group purchasing organizations (GPOs).¹² Also known as rebate aggregators, these entities are subsidiaries or joint ventures of PBMs and have effectively taken over their rebate negotiation and management functions. Whether or how these affiliates complicate disclosure requirements remains to be seen. For the time being, they may be captured within the relatively broad definitions of PBM-affiliated entities in the CAA and DOL proposed rule. The FTC took a more direct approach, requiring that Express Scripts bring its Switzerland-headquartered GPO onto US shores and explicitly including it in existing safe harbor reporting and disclosure requirements.

The fourth consideration is whether the information created by transparency reforms can be used to reduce rather than increase competition among PBMs, pharmacies, and pharmaceutical manufacturers.^13,14 Transparency can facilitate better purchasing when competition is intense, but in concentrated markets, price disclosure can also encourage tacit collusion rather than competition. For example, detailed rebate and formulary placement data could reveal the terms of existing agreements and most-favored-nation clauses and weaken PBMs’ negotiating leverage with manufacturers. Granular pharmacy reimbursement data could produce a similar effect: In regional markets, visibility into competitors’ reimbursement rates could allow tacit coordination on reimbursement terms. There are penalties for sharing confidential data, but disclosure remains a risk.

What’s Next?

The current wave of transparency policies represents an important step forward. Although transparency will face challenges, it also promises new information about the strengths and limits of competition in the market for pharmacy benefits. This knowledge is critical for regulating drug price negotiations delivered through a market structure reliant on purchaser choice.

The power of transparency initiatives may ultimately lie in their ability to better quantify the trade-offs associated with this system’s complexities. In this context, the 4 conditions for successful transparency offer a diagnostic for identifying where further intervention is needed. Pursuing transparency first allows policy makers, regulators, and plan sponsors to identify risks and benefits of the next generation of reform.

Author Information

Ms Gens is a senior research associate at West Health, based in Washington, DC. Ms Kaltenboeck is the president of Verdant Research, based in Oakton, Virginia. Support for this work was provided by West Health Policy Center.

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