PBM Reform Picks Up Pace with Enactment of Consolidated Appropriations Act, PBM Fee Disclosure Proposed Rule

PBMs to Remain a Prominent Area of Focus

Pharmacy benefit manager (PBM) reform has been an active and evolving area for policymakers in Washington, D.C. for many years but reform efforts have noticeably picked up pace in 2026. Recent actions by Congress and the Trump administration underscore how PBM reform has gained new momentum this year and continues to be a key area of focus for policymakers as they consider health care affordability, transparency, and drug pricing issues. These actions present new oversight, enforcement and compliance considerations. This client alert provides an update on some of the recent reforms that are poised to change the PBM landscape and why PBM reform is likely to remain a prominent area of focus this year.

PBM Reforms and Reports in the Consolidated Appropriation Act, 2026

The recently-enacted Consolidated Appropriations Act, 2026 (CAA, P.L. 119-75) includes PBM reforms. This milestone marks the culmination of years of bipartisan, bicameral work on legislation to advance various PBM reforms. It also marks a turning point in the expectations around transparency in PBM practices. Section 6224 of CAA (Modernizing and Ensuring PBM Accountability) prohibits PBMs and their affiliates from deriving remuneration for covered Part D drugs based on the price of a drug. This section also seeks to enhance transparency with respect to PBM practices in Medicare by requiring PBMs to define and apply drug pricing terms in contracts with Part D plan sponsors and comply with new requirements to report on drug pricing and other information to Part D plan sponsors, and it sets forth new audit rights for these plan sponsors with respect to PBMs. 

Section 6701 (Oversight of pharmacy benefit management services) also seeks to enhance transparency with respect to PBMs. This section sets forth new requirements for PBMs to provide group health plans and issuers with detailed data on prescription drug spending, including gross and net drug spending, drug rebates, spread pricing arrangements, formulary placement rationale, and information about benefit designs and the use of pharmacies affiliated with PBMs. This report must be provided semi-annually (quarterly upon request). In addition, PBMs must provide health plans with a summary document to be provided to individual participants and beneficiaries upon request containing information about the plans’ prescription drug coverage and spending. Section 6702 (Full rebate pass through to plan; exception for innocent plan fiduciaries) requires PBMs to pass through 100 percent of drug rebates and discounts, excluding bona fide service fees, to the group health plan or group health plan insurance issuer. Failure to do so will result in significant “prohibited transaction” penalties under Section 408(b)(2)(B) of the Employee Retirement Income Security Act of 1974 (ERISA). This new requirement applies to new contracts, extensions, or renewals entered into for plan years that begin 30 months after enactment of CAA.

With the enactment of CAA, Congress has also set the stage for continued scrutiny of PBM practices going forward by including provisions requiring studies and reports by the Government Accountability Office (GAO) and Medicare Payment Advisory Commission (MedPAC). GAO is charged with conducting an extensive study on the use of compensation and payment structures related to a prescription drug’s price within the retail prescription drug supply chain in Medicare Part D and submitting to Congress a report regarding the results of the study, and recommendations, not later than two years after enactment of CAA. Similarly, MedPAC is required to submit to Congress an initial and final report on agreements between PBMs and prescription drug plans and Medicare Advantage prescription drug plans and related recommendations. The inclusion of these oversight provisions is not surprising given the significant bipartisan, bicameral focus by Congress on PBM practices and related legislation in recent years and which has continued to be an area raised by lawmakers in recent health care related Congressional hearings. These future reports and related recommendations will be closely watched as they may result in renewed interest in further reforms in future years.

The Department of Labor Proposes PBM Fee Disclosure Rule

PBM reform has also been an area of focus for the Trump administration over the past year. On April 15, 2025, President Trump issued the Lowering Drug Prices by Once Again Putting Americans First Executive Order (EO). The EO called for the Secretary of Labor to propose regulations to improve employer health plan fiduciary transparency into the direct and indirect compensation received by PBMs. On January 30, 2026, the Secretary of Labor fulfilled this charge with the Department of Labor (DOL) issuing a proposed rule to require providers of pharmacy benefit management services (PBM services) and affiliated providers of brokerage and consulting services to disclose information about their compensation to fiduciaries of self-insured group health plans subject to ERISA. Comments on the proposed rule are due by March 31, 2026, and may be informed by the reforms recently enacted in CAA.

The proposed rule lays out DOL’s intent to provide transparency into contracts and arrangements with PBMs and affiliated brokers and consultants so that the responsible plan fiduciaries of ERISA-covered self-insured group health plans can better fulfill their statutorily mandated role to determine that the service contracts or arrangements are reasonable. The proposed rule poses new compliance considerations, including with respect to audit provisions designed to ensure that the responsible plan fiduciaries of self-insured group health plans can verify the accuracy of disclosures. 

Of note, the proposed rule defines PBM services as services necessary for the management or administration of a self-insured group health plan's prescription drug benefits (including the self-insured group health plan's provision of prescription drugs through the plan's medical benefit), regardless of whether the person, business, or entity performing the service identifies itself as providing PBM services. The proposed rule provides examples of PBM services that include but are not limited to a range of activities such as: acting as a negotiator or aggregator of rebates, fees, discounts and other price concessions for prescription drugs; establishing or maintaining prescription drug formularies; establishing or maintaining pharmacy networks, through contract or otherwise (including a mail order pharmacy, a specialty pharmacy, a retail pharmacy, a nursing home pharmacy, a long-term care pharmacy, and an infusion or other outpatient pharmacy) to provide prescription drugs; processing and payment of claims for prescription drugs; performing utilization review and management (including the processing of prior authorization requests for drugs, step therapy protocols, patient compliance analyses, conducting therapeutic intervention, and administering generic substitution programs); adjudicating appeals or grievances related to the covered plan's prescription drug benefits; and recordkeeping related to the covered plan's prescription drug benefits; and, in conjunction with any of these other services, performing regulatory compliance with respect to the covered plan's prescription drug benefits under the service contract or arrangement.

DOL’s promulgation of the fee disclosure rule marks another significant inflection point for PBM reform. As with other proposed PBM reforms, this rulemaking will be closely watched with an eye toward how any final rule may further impact PBMs and the broader health care landscape.

What’s Next for PBM Reform?

DOL’s fee disclosure rule further underscores how the PBM landscape is continuing to evolve as both Congress and the administration pursue reforms intended to enhance PBM transparency and seek to lower drug pricing for patients. Despite these recent actions by DOL and Congress, and years of Congressional activity leading up to it, the focus on PBMs is unlikely to abate.  It has been a consistent, bipartisan area of health care focus for policymakers. The mid-term elections later this year and policymakers’ focus on the broader theme of affordability are likely to keep PBMs in the forefront. Members of Congress have consistently raised PBM reform in the context of Congressional hearings and may continue to look to do so as they hold more hearings this year. The Lowering Drug Prices by Once Again Putting Americans First EO also called for revaluating the role of middlemen, presenting another potential area to watch when it comes to the evolving PBM landscape. As policymakers turn to the Fiscal Year 2027 budget and appropriations process, Washington will enter a season often defined by administration officials appearing before Congress to testify on the proposed budget. These hearings create opportunities for lawmakers and the administration to further engage on PBM topics and will provide further insight into how the PBM and broader health care landscape may further evolve.