Pharmacy benefit managers have operated with relatively little federal oversight for decades, and pressure to change that has been building. PBM reform is one of the few genuinely bipartisan issues in Congress, with lawmakers from both parties backing legislation that would 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 roughly 270 million Americans with drug coverage. Just as important is a caveat this article returns to throughout: as of early 2026, much of the proposed federal reform had not been enacted, so it is essential to separate what is law from what is still a proposal.
What Is a PBM, and Why Does It Matter?
A pharmacy benefit manager is a middleman that administers prescription drug benefits for health plans, employers, and government programs. PBMs negotiate rebates with drug manufacturers, build the formularies that decide which drugs are covered and at what tier, set how much pharmacies are reimbursed, and process pharmacy claims. Because they sit at the center of the drug supply chain, their decisions ripple out to your copay, which pharmacy you can use, and whether a given medication needs prior authorization. Our explainer on what a PBM is goes deeper into how the model works.
Why PBM Reform Is Happening Now
Several converging factors have pushed PBM reform up the legislative and regulatory agenda. The Federal Trade Commission’s July 2024 interim staff report on PBMs documented troubling practices among the three largest companies, CVS Caremark, Express Scripts, and OptumRx. The FTC reported that the top three PBMs processed nearly 80 percent of the roughly 6.6 billion prescriptions dispensed by U.S. pharmacies in 2023, and that the top six managed more than 90 percent. It also found that pharmacies affiliated with the three largest PBMs accounted for nearly 70 percent of all specialty drug revenue, and that vertically integrated PBMs have the ability and incentive to favor their own pharmacies. A follow-up FTC interim report in January 2025 examined rebates and formulary practices and highlighted large markups on certain specialty generic drugs dispensed through PBM-affiliated pharmacies.
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, with many citing below-cost PBM reimbursements as a primary factor. When a rural community loses its only pharmacy, residents may have to travel much farther 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 a top healthcare concern for voters across the political spectrum, according to KFF polling.
What Regulators Have Actually Done
It is worth distinguishing enforcement and rulemaking that has actually occurred from legislation that is still pending:
- FTC interim reports (2024 and 2025). These are investigative staff reports, not rules. They document practices and build the case for action but do not themselves change the law.
- FTC administrative complaint on insulin (September 2024). The FTC filed an administrative action against the three largest PBMs and their affiliated group purchasing organizations, alleging that their rebating practices artificially inflated insulin list prices. This is an enforcement proceeding whose outcome may still be contested.
- Inflation Reduction Act Medicare Part D changes. Separate from PBM-specific bills, the Inflation Reduction Act made changes that are already law, including a $35 monthly cap on insulin for Medicare beneficiaries and a $2,000 annual cap on Part D out-of-pocket drug spending that took effect in 2025. These affect what patients pay but are not the same as the PBM structural reforms below.
Key Federal PBM Reform Proposals
Multiple bills targeting different aspects of PBM operations have been introduced and debated in recent Congresses. It is important to be precise here: the items below are proposals, and as of early 2026 broad federal PBM reform along these lines had largely not been signed into law. Verify the current status before treating any of them as a settled rule.
Rebate pass-through requirements. Several bills would require PBMs to pass manufacturer rebates through to the point of sale, directly reducing patient copays. Under current practice, 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 limits. Spread pricing occurs when a PBM charges the health plan more for a drug than it pays the pharmacy and pockets the difference. Several states have already banned spread pricing in Medicaid. Federal proposals would extend such limits to Medicare Part D and, in some versions, commercial plans.
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, more broadly. Currently, many 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, a significant shift from the current vendor relationship.
Delinking compensation from drug prices. “Delinking” proposals would separate PBM compensation from the list price of drugs, so PBMs would earn flat fees or per-claim charges instead of a percentage tied to price. The aim is to remove the incentive to favor high-list-price drugs that generate larger rebates.
Notably, versions of several of these provisions were attached to end-of-year federal spending negotiations in recent sessions but were dropped or stalled before enactment. That history is a good reminder that a bill advancing through a committee is not the same as a bill becoming law.
State-Level PBM Reforms Already in Effect
While federal legislation stalls, states have moved ahead. More than 40 states have enacted some form of PBM legislation, according to the National Conference of State Legislatures. The Supreme Court’s 2020 decision in Rutledge v. PCMA affirmed that states may regulate PBM reimbursement to pharmacies, which cleared the way for more state action. Key trends include:
PBM licensure. Many states now require PBMs to obtain a state license or registration, giving insurance regulators authority to oversee practices and investigate complaints.
Gag clause prohibitions. States have banned “gag clauses” that prevented pharmacists from telling patients when a medication’s cash price was lower than their insurance copay. A federal gag-clause ban also took effect in 2020, and state laws often add protections.
MAC list transparency. Maximum Allowable Cost (MAC) lists set the ceiling 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, aiming to protect independent pharmacies and preserve patient choice.
State authority has limits: ERISA generally constrains how far states can regulate self-funded employer health plans, which is one reason reform advocates continue to push for federal action.
What PBM Reform Could Mean for Patients
If the major reform proposals were to become law, patients could see several tangible changes. Because these depend on legislation that had not passed as of early 2026, treat them as potential outcomes rather than guarantees:
Lower copays. Point-of-sale rebate pass-throughs would directly reduce what you pay at the counter, especially for brand-name drugs with large rebates.
Simpler prior authorization. Reform packages often include provisions to streamline prior authorization, such as shorter decision timelines, electronic submission, 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 slow closures if reimbursements are required to cover at least a pharmacy’s acquisition cost.
Greater transparency. You may gain access to more information about why a medication costs what it does and how your PBM is compensated.
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 raise 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 substantial sums through negotiated discounts.
Transparency mandates, they argue, could weaken PBMs in negotiations with manufacturers, potentially leading to higher prices if manufacturers learn competitors’ exact rebate amounts.
PBMs also warn that heavy regulation could drive consolidation, pushing smaller PBMs out and reducing competition, since compliance costs fall hardest on smaller players.
Drug manufacturers, meanwhile, broadly support PBM reform, arguing that the rebate system inflates list prices. They contend 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, comprehensive federal PBM reform legislation had been debated and had advanced in parts of Congress, but broad structural reform had largely not been enacted into law. The bipartisan interest suggests some form of reform could eventually pass, but the timing and scope remain uncertain, and prior attempts have stalled. Narrower measures with the broadest support, such as transparency requirements and Medicaid or Medicare spread-pricing limits, are generally seen as more likely than aggressive steps like fiduciary duty or structural separation of PBMs from insurers.
State-level reform will continue regardless of federal action, and additional states have PBM bills pending in 2026 sessions, building on earlier adopters. Regulatory activity at the FTC also continues independently of the legislative calendar.
Frequently Asked Questions
Has federal PBM reform become law?
As of early 2026, broad federal PBM reform (such as nationwide transparency and delinking requirements) had been proposed and debated but was largely not enacted. Some narrower or Medicare-specific measures and the Inflation Reduction Act’s Part D changes are in effect, but they are distinct from the comprehensive PBM bills. Verify the current status through official sources before assuming any specific rule applies.
Will PBM reform lower my prescription costs?
It could, if enacted. Point-of-sale rebate pass-throughs would directly lower copays on brand-name drugs for many patients. However, the net effect depends on how any reform interacts with premiums, deductibles, and plan design, and some analyses suggest lower copays could be partly offset by higher premiums.
When will PBM reform take effect?
Many state reforms are already in effect. Any federal reform, once enacted, would likely phase in over one to three years depending on the provision. Because major federal legislation had not passed as of early 2026, there is no firm nationwide effective date to cite.
Does PBM reform affect Medicare?
Some proposals specifically target PBM practices in Medicare Part D, and separate Inflation Reduction Act provisions (like the $2,000 out-of-pocket cap) already affect Part D beneficiaries. Congress has direct authority over Medicare, so Medicare-focused changes are often the first to advance.
Are there alternatives to the “Big Three” PBMs?
Yes. Transparent PBMs such as Navitus Health Solutions, Capital Rx, and the Mark Cuban Cost Plus Drug Company PBM offer pass-through models where rebates flow to the plan sponsor and the PBM earns administrative fees. Employers interested in alternatives can request proposals from multiple PBMs.
Staying Informed on PBM Reform
The PBM reform landscape is evolving, and the line between proposal and law can change quickly. Track federal legislation through Congress.gov, regulatory action through the FTC, and state developments through the National Conference of State Legislatures. Understanding these changes helps you anticipate how your prescription costs and pharmacy access may shift. 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.
A quick note: This article is general educational information about health policy, not legal, financial, or medical advice. PBM reform is a fast-moving area: as of early 2026, broad federal reform had largely not been enacted, and the status of specific bills and enforcement actions can change at any time. Verify the current state of the law through official sources such as Congress.gov, the FTC, and CMS before relying on it, and talk to your plan or pharmacist about how any changes affect your specific coverage.
Sources
- Federal Trade Commission (FTC) – interim staff reports on pharmacy benefit managers (July 2024 and January 2025); September 2024 administrative complaint regarding insulin rebating
- KFF (Kaiser Family Foundation) – prescription drug pricing analysis and public opinion polling
- Centers for Medicare & Medicaid Services (CMS) – Inflation Reduction Act Medicare Part D reforms (insulin cap, $2,000 out-of-pocket cap)
- Congress.gov – status of federal PBM legislation (verify current)
- National Conference of State Legislatures (NCSL) – state PBM laws; National Community Pharmacists Association (NCPA) – independent pharmacy closures
- U.S. Supreme Court – Rutledge v. Pharmaceutical Care Management Association (2020)