Pharmacy benefit managers have operated with minimal federal oversight for decades, but that era is ending. PBM reform has become one of the few genuinely bipartisan issues in Congress, with lawmakers from both parties pushing legislation that would fundamentally change how these companies do business. At stake: whether the rebates PBMs negotiate actually reach patients, whether independent pharmacies can survive, and whether prescription drug costs come down for the 270 million Americans with drug coverage.
Why PBM Reform Is Happening Now
Several converging factors have pushed PBM reform to the top of the legislative agenda. The Federal Trade Commission’s 2024 report on PBMs documented troubling practices among the three largest companies — CVS Caremark, Express Scripts, and OptumRx. The FTC found that these PBMs increasingly retained rebate revenue, used opaque pricing practices, and leveraged vertical integration to steer patients toward affiliated pharmacies and services.
Independent pharmacy closures have accelerated, with rural communities hit hardest. According to the National Community Pharmacists Association, more than 1,000 independent pharmacies closed in 2023 alone, many citing below-cost PBM reimbursements as a primary factor. When a rural community loses its only pharmacy, residents may need to travel 30 miles or more for prescriptions.
Patient frustration is mounting too. Rising copays, denied medications, and complex prior authorization requirements have generated constituent complaints that lawmakers cannot ignore. Prescription drug costs remain the top healthcare concern for voters across the political spectrum, according to KFF polling.
Key Federal PBM Reform Proposals
Multiple bills have advanced through Congress, targeting different aspects of PBM operations. The most significant proposals include:
Rebate pass-through requirements. Several bills would require PBMs to pass 100% of manufacturer rebates to the point of sale, directly reducing patient copays. Under current practices, PBMs often retain a portion of rebates or pass them to the health plan (which may use them to reduce premiums rather than lower copays). Point-of-sale rebates would particularly benefit patients who have not yet met their deductible.
Spread pricing bans. Spread pricing occurs when a PBM charges the health plan more for a drug than it pays the pharmacy, pocketing the difference. Several states have already banned spread pricing in Medicaid. Federal proposals would extend this ban to Medicare Part D and potentially commercial plans. According to Congressional Budget Office analyses, spread pricing adds billions in unnecessary costs to government programs.
PBM transparency mandates. These proposals would require PBMs to disclose rebate amounts, administrative fees, and pharmacy reimbursement rates to plan sponsors and, in some cases, to the public. Currently, most PBM contracts include confidentiality clauses that prevent employers from seeing the full picture of their drug spending.
Fiduciary duty. Some bills would establish a legal requirement for PBMs to act in the best interest of their clients (the health plan or employer) rather than maximizing their own revenue. This would be a significant shift from the current standard, where PBMs operate as vendors rather than fiduciaries.
Delinking compensation from drug prices. Proposals to delink PBM compensation from the list price of drugs aim to eliminate incentives for PBMs to favor high-list-price drugs that generate larger rebates. Instead, PBMs would be compensated through flat fees or per-claim charges unrelated to drug cost.
State-Level PBM Reforms Already in Effect
While Congress debates, states have moved ahead. More than 40 states have enacted some form of PBM legislation, according to the National Conference of State Legislatures. Key trends include:
PBM licensure. Approximately 30 states now require PBMs to obtain a state license to operate, giving insurance regulators authority to oversee PBM practices and investigate complaints.
Gag clause prohibitions. Most states have banned “gag clauses” — contract provisions that prevented pharmacists from telling patients when the cash price of a medication was lower than their insurance copay. A federal gag clause ban took effect in 2020, but state laws often provide additional protections.
MAC list transparency. Maximum Allowable Cost (MAC) lists determine the maximum amount a PBM will reimburse a pharmacy for generic drugs. Several states require PBMs to update MAC lists regularly and provide appeal processes when pharmacies are reimbursed below their acquisition cost.
Anti-steering laws. Some states prohibit PBMs from steering patients toward affiliated pharmacies through benefit design or pricing differentials. These laws aim to protect independent pharmacies and preserve patient choice.
What PBM Reform Means for Patients
If the major reform proposals become law, patients could see several tangible changes:
Lower copays. Point-of-sale rebate pass-throughs would directly reduce what you pay at the pharmacy counter, especially for brand-name drugs with large rebates. A medication with a $200 rebate on a $500 list price could see your copay drop significantly.
Simpler prior authorization. Reform packages often include provisions to streamline prior authorization — shorter decision timelines, electronic submission requirements, and “gold card” exemptions for prescribers with high approval rates. Our prior authorization for medication guide explains the current process in detail.
Better pharmacy access. Protections for independent and rural pharmacies could prevent additional closures. If your local pharmacy stays open because PBM reimbursements are required to cover at least the pharmacy’s acquisition cost, that is a direct benefit.
Greater transparency. You may gain access to more information about why your medication costs what it does, how your PBM is compensated, and whether cheaper alternatives exist at different pharmacies.
Industry Response and Opposition
PBMs and their trade association, the Pharmaceutical Care Management Association (PCMA), argue that reform proposals could backfire. Their key arguments include:
Mandating point-of-sale rebates could increase premiums for everyone, since rebates currently used to offset premium costs would instead reduce individual copays. The PCMA contends that PBMs already save the healthcare system hundreds of billions annually through negotiated discounts.
Transparency mandates could disadvantage PBMs in negotiations with drug manufacturers, potentially leading to higher drug prices if manufacturers know the exact rebate amounts competitors are offering.
PBMs also warn that excessive regulation could drive consolidation, pushing smaller PBMs out of the market and ultimately reducing competition. This argument carries some weight — regulatory compliance costs disproportionately burden smaller players.
Drug manufacturers, meanwhile, broadly support PBM reform, arguing that the current rebate system inflates list prices. They contend that they would lower list prices if the rebate system were reformed, though critics note that manufacturers have rarely reduced prices voluntarily.
The Path Forward
As of early 2026, federal PBM reform legislation has advanced through committee in both chambers of Congress but has not yet been signed into law. The bipartisan nature of the effort — with support from senators and representatives across the political spectrum — suggests that some form of reform will eventually pass. The question is how comprehensive it will be.
The most likely outcomes include transparency requirements and Medicaid/Medicare spread pricing bans, which have the broadest support. More aggressive proposals — like fiduciary duty requirements or structural separation of PBMs from insurers — face stronger industry opposition and may be modified or excluded from final legislation.
State-level reform will continue regardless of federal action. Several additional states have PBM bills pending in 2026 legislative sessions, building on the momentum of earlier adopters.
Frequently Asked Questions
Will PBM reform lower my prescription costs?
Potentially, yes. Point-of-sale rebate pass-throughs would directly lower copays on brand-name drugs for many patients. However, the net effect depends on how reforms interact with premiums, deductibles, and plan design. Some analyses suggest that lower copays could be partially offset by higher premiums.
When will PBM reform take effect?
State reforms are already in effect in many jurisdictions. Federal reform, once enacted, would likely include implementation timelines of 1 to 3 years, depending on the provision. CMS rules targeting Medicare Part D PBMs could take effect sooner than legislation affecting commercial markets.
Does PBM reform affect Medicare?
Yes. Several reform proposals specifically target PBM practices in Medicare Part D, including banning spread pricing, requiring rebate pass-throughs, and mandating transparency reporting to CMS. Medicare reform is often the first step because Congress has direct authority over the program.
Are there alternatives to the Big Three PBMs?
Yes. Transparent PBMs like Navitus Health Solutions, Capital Rx, and Mark Cuban Cost Plus Drug Company’s PBM offering provide alternatives. These companies typically use pass-through pricing models where 100% of rebates flow to the plan sponsor, and the PBM earns only administrative fees. Employers interested in exploring alternatives should request proposals from multiple PBMs.
Staying Informed on PBM Reform
The PBM reform landscape is evolving rapidly. Track federal legislation through Congress.gov and state-level developments through the National Conference of State Legislatures. Understanding these changes helps you anticipate how your prescription costs and pharmacy access may shift in the coming years. For broader context on how PBMs fit into the U.S. healthcare system, explore our healthcare policy guide and our explainer on what a PBM is.