7 things you need to know about the PBM reforms signed into law this week

Experts and interested parties are digging into the pharmacy benefit manager (PBM) reform provisions that were included in the massive spending bill that President Donald Trump signed into law on Feb. 3. We spoke to several of them and read some (not all) of the bill’s language ourselves. Here are seven things to know to understand PBM reform.

Medicare and commercial plans are addressed differently in the law

The recently signed law addresses PBM conduct in Medicare Part D plans and in commercial plans separately. Within the sections on commercial health plans, there is a mandate for 100% pass-through of rebates that PBMs and their affiliates, including group purchasing organizations, receive from pharmaceutical manufacturers. The requirement of 100% pass-through is significant because PBMs will have to assess all their client contracts in the commercial space to determine whether they comply, says Theresa C. Carnegie, an attorney with Mintz who works with health plans and PBMs.

“Delinking” PBM compensation from list prices and the so-called any willing provider/pharmacy provisions only applies in Medicare Part D. The legislation defines a bona fide service fee as a flat, fair market value fee. But Carnegie says that the law doesn’t ban rebates and that rebates are not in violation of this bona fide service as long as the PBM passes them all to the plan. In other words, she says, Part D PBMs can’t keep rebates as compensation because they would be in violation of the bona fide service fee requirement.

Lisa Joldersma, J.D., a strategic adviser at Avalere Health and a PBM expert, says the legal framework that puts fiduciary responsibility on self-insured employers argues for letting self-insured employers decide whether delinking is in their interest rather than imposing it through regulation. She notes that California and Colorado passed delinking legislation last year that applies to the state-regulated, fully insured market, although, under some interpretations, it applies at the PBM level and, therefore, perhaps to self-insured employers.

The any willing pharmacy provisions concerning the PBMs’ network of pharmacies also apply only to Medicare Part D, not to PBMs and their commercial market customers. CMS had already issued any willing pharmacy rules, but language in the PBM provisions in the spending bill will put the force of statute behind the rules.

Lucas W. Morgan, an attorney with Buchanan Ingersoll & Rooney, says this part of the law eliminates any confusion about whether independent pharmacies can participate and remain in PBM networks. The law also calls for the development of standards for what constitutes reasonable and relevant terms and conditions of participation. The intent is to keep PBMs from including conditions that would favor their affiliates, for example, rules about hours of operation that an independent pharmacy might find difficult or impossible to meet.

The law also has extensive disclosure and transparency requirements for PBMs on the commercial and Medicare sides. PBMs must report health plans' information about drug pricing, rebates, pharmacy reimbursement and benefit design structure.

Group purchasing organizations are included

The large PBMs have set up group purchasing organizations that critics of the industry say capture revenue “upstream” from the recognizable PBMs and belie promises of 100% pass-through. However, the language in the new law is expansive, referring to entities that provide pharmaceutical benefit services and, at times, to group purchasing organizations explicitly. Joldersma cautions that there might be limitations to the enforceability of those provisions for group purchasing organizations that are headquartered overseas.

What’s not in the law

Experts we spoke with say the passage of these PBM reforms is a milestone in addressing what some have characterized as problematic business practices, but it does not address some important issues. Some things left out of the law include the following:

Bans on spread pricing. The legislation doesn’t have any rules that would ban spread pricing, in which PBMs collect more from their payer clients for a prescription than they pay the pharmacy. Earlier versions of the legislation did have provisions that would have banned spread pricing in state Medicaid programs. Reporting by The Columbus Dispatch about spread pricing in the Ohio Medicaid program brought the practice to light and triggered this current era of scrutiny, criticism and regulation of PBMs.

As a practical matter, the absence of a prohibition on spread pricing in Medicaid in this federal legislation won't make much of a difference because most states have already moved to ban spread pricing in their Medicaid programs, Joldersma explains.

The reporting requirements for PBMs to share pricing information for commercial plans would, in theory, empower employers and plans to determine whether spread pricing is a practice that they want to reconsider, Carnegie says.

Affordable Care Act plans. None of the PBM reform provisions apply to the health plans sold on the individual market, including Affordable Care Act (ACA) exchange plans. That means no one with an ACA plan, many of which have high deductibles, will benefit from the rebate pass-through provisions. "That's a surprise to me, given how long this legislation has been winding its way through Congress and given the heightened focus on affordability for individuals," says Joldersma.

Medicaid programs and PBMs. Previous versions of PBM reform bills, including one that was in the One Big Beautiful Bill spending bill signed by Trump in July 2025, had provisions related to Medicaid. Carnegie says it prohibited pharmacy spread pricing in Medicaid, but the legislation that was passed removed anything related to Medicaid. Instead, the provisions that became law this week direct the Government Accountability Office to do a study of PBM compensation across Medicare and Medicaid.

The PBM legislation is a big deal…

This is the first new federal law in 20 years affecting PBMs. The transparency requirement means PBMs can “no longer rely on their opaque, complex business practices or contract omissions and engage in certain conduct that may have gone unnoticed by the plan sponsor,” Morgan says.

For pharmacies, the law levels the playing field for independent and some health-system pharmacies, changes how PBMs are compensated and mandates transparency with reporting on drug spending and formularies.

Specifically, Morgan says the requirement to establish standards for what constitutes reasonable and relevant terms and conditions of participation in PBM pharmacy networks is important. The Big Three PBMs — CVS Caremark, Express Scripts and Optum Rx — have been accused of steering patients away from independent pharmacies to their own pharmacies.

… but so are efforts by the FTC and Department of Labor

In the same week that the PBM law was signed, Express Scripts agreed to make major changes to its operations to settle a lawsuit brought by the Federal Trade Commission (FTC). The FTC had sued Express Scripts, as well as CVS Caremark and Optum Rx, in September 2024, saying the PBMs and their group purchasing organizations inflated the list price of drugs, including insulin, and shifted costs to patients.

Express Scripts agreed to several reforms, including making sure more lower-priced medicines, including insulins, are covered across all standard formularies; making sure more members pay the lowest available cost for their medicines, whether it is the negotiated cost, their copay, or a cash discount price; transitioning off rebates and spread pricing; and increasing transparency.

And last week, the Department of Labor announced a proposed rule that would require PBMs, brokers and consultants to disclose more information to self-insured employers to satisfy the Employee Retirement Income Security Act (ERISA) that governs them. Those are to make sure fiduciaries have access to information about payments from drug manufacturers, spread pricing, pharmacy clawbacks, and price protection agreements.

States are still leading the way for PBM reform

The states have been at the forefront of efforts to create meaningful changes to the PBM market. Carnegie says states are starting to seriously consider PBM reform from an anticompetitive perspective. These efforts are the result of concerns about vertical integration, where large companies own health insurance, PBMs, group purchasing organizations, pharmacies and specialty pharmacies.

For example, last year, Arizona passed a law that would prohibit PBMs from owning retail or mail-order pharmacies in the state, a first-of-its-kind law. It was supposed to be implemented in January 2026, but the largest PBMs sued the state, and a judge issued an injunction against the law.

A new law in California went into effect in January 2026 that not only bans spread pricing and requires 100% pass-through of rebates from PBMs and group purchasing organizations but also imposes fiduciary duties on PBMs to act in the best interest of their customers. Noncompliance with the California law carries penalties of up to $7,500 per violation.

The Pharmaceutical Care Management Association, in January 2026, however, challenged the fiduciary requirement in the California law, saying it interferes with the fiduciary requirement of ERISA.

The market was starting to compel PBM changes

Little by little, the large PBMs have been making changes and moving their clients to different pricing measures and developing more innovative contracts. For example, CVS Caremark has signed a contract with the California Public Employees' Retirement System that includes performance guarantees that hold the PBM accountable for meeting cost and quality targets. The agreement requires CVS to put $250 million at risk if it does not meet goals for controlling pharmacy benefit costs and ensuring clinical quality outcomes for members. The contract also provides for increased transparency, audit and oversight provisions throughout the five years of the contract.

Express Scripts, which is part of Cigna’s Evernorth Health Services, is adopting a new rebate-free pharmacy benefit model. Cigna Healthcare will adopt this model for its fully insured lives beginning in 2027. It will become the standard model available for all Evernorth pharmacy benefits clients beginning in 2028. Evernorth is also adopting a new reimbursement model that compensates pharmacies based on their cost for medications, plus a dispensing fee, and provides additional reimbursement for clinical services they provide to patients.

Optum Rx began implementing a new program that changes how pharmacies are reimbursed, aligning more closely with the costs pharmacies incur. The goal is for full implementation by Jan. 1, 2028. Additionally, last year, company officials made a commitment to pass on 100% of rebates they manage by 2028.