A landmark shift in healthcare: 3 insights from MHE and Drug Topics' webinar on PBM reform

New laws and court decisions, settlements with the Federal Trade Commission, and a proposed Department of Labor rule are leading to a sweeping transformation that is already under way in the U.S. healthcare system.

Pharmacy benefit managers (PBMs) are now facing the same transparency and accountability requirements that employers and health plans are subject to. Two industry experts said at a webinar yesterday that these changes could fundamentally reshape how PBMs, employers, pharmacies and insurers manage prescription drug costs.

During the webinar, titled “PBMs, Transparency and Fiduciary Responsibility,” two industry leaders — Jeffrey Hogan, managing director and co-founder of Judi Group, and Chad Worz, Pharm.D., executive director and CEO of The American Society of Consultant Pharmacists — examined the evolving regulatory landscape in the PBM industry. The webinar was moderated by Ron Lanton III, Esq., partner at Lanton, Lanton & Sosa Law and co-sponsored by Managed Healthcare Executive and Drug Topics, another publication owned by MJH Life Sciences.

“In my 40-plus years in healthcare, I've never seen as much activity, particularly in the courts and federal legislation and state legislation focused specifically on pharma and particularly on PBMs,” Hogan said.

The changes are not incremental tweaks, Worz said. “They directly address the predatory contracting that has squeezed pharmacies, in particular long-term care pharmacies, for years.”

Here are the key insights from the webinar.

CAA 2026 rewrites the rules; FTC settlements set a new standard for PBM conduct

The Consolidated Appropriations Act of 2026, the first new federal legislation in 20 years to address pharmacy benefits, is the most consequential PBM reform in recent history, the webinar participants said. The law mandates full rebate pass-through, gives plan sponsors non-waivable audit rights, and requires machine-readable cost reports with changes that take effect Jan. 1, 2029.

“PBMs have become for most employers a black box of opacity that they don’t understand,” Hogan said. “They don't understand how the PBMs work, whether or not they actually help or hurt them.”

He said the beginning of the transparency movement was the Consolidated Appropriations Act of 2021, which amended ERISA to become the legal foundation for health plan fiduciaries to obtain and evaluate disclosures of compensation to TPAs and on broker compensation. CAA 2026, he said, provides the transparency and the infrastructure for employers to act in the best interest of their members.

Both Hogan and Worz agreed that liability for employers and plans begins now: employers who continue operating under noncompliant legacy contracts could face fiduciary exposure.

On the pharmacy side, Worz said CAA 26 requires CMS to define and enforce reasonable and relevant contract terms, including reasonable reimbursement and dispensing fees. It also creates a formal appeals process with real teeth and monetary penalties.

The FTC's consent orders with Express Scripts and CVS Caremark — and a pending action against Optum Rx — mandate rebate pass-through and cost-plus pharmacy reimbursement, as well as enhanced transparency mandates for drug-level reporting and disclosure of broker payments. The settlements also tighten oversight of financial flows that can distort formulary and contracting decisions. Experts described these not simply as penalties against three companies, but as the establishment of a “fiduciary PBM model” that puts pressure on other PBMs.

Additionally, a Department of Labor proposed rule, expected to be finalized soon, would further reclassify PBMs as “covered service providers” under ERISA — stripping prohibited-transaction exemptions from any PBM that fails to make full compensation disclosures before contracting.

A different type of healthcare marketplace is emerging

Hogan and Worz alluded to a broader trend that is taking shape in the healthcare industry. Increased transparency, combined with advances in data analytics and artificial intelligence, are empowering employers and patients with better information about healthcare costs. New market entrants are offering transparent pricing models, particularly in pharmacy costs, signaling a shift toward a more competitive and accountable system.

Hogan said during the webinar that when he began his career, pharmacy represented roughly 4.5% of employers’ total cost of care. For some large employers today, it approaches 46% to 50%, with specialty drugs driving nearly a third of catastrophic stop-loss claims.

Additionally, bipartisan support grows for addressing high costs and anti-competitive practices, and the traditional PBM model is giving way to a more transparent, value-driven marketplace.

Worz added that the reforms could be stabilizing for long-term care pharmacies if reasonable and relevant reimbursement benchmarks are set correctly, covering real dispensing costs that PBMs have historically suppressed to near zero.

Expect more reform, especially of 340B drug pricing

Depending on how effective the current reform efforts are at creating oversight and driving transparency, additional reforms are likely, Worz said during the webinar. But the 340B Drug Pricing Program is ripe for change. The program has become controversial, with critics saying health systems pocket 340B funds. Hospitals counter that they use the money to cover the costs of providing care to low-income patients.

The 340B program allows qualifying hospitals and other providers, such as federally qualified health centers, to purchase medications at discounted rates from drug manufacturers and use the difference between the discounted price and the reimbursement from commercial insurers and other payers to fund patient care services. Since its implementation in 1992, the 340B program has grown to two-thirds of all nonprofit hospitals in the United States.

The Health Resources & Services Administration (HRSA), which oversees the 340B program, plans to begin a pilot 340B rebate program for those drugs on the first set of the CMS Medicare drug price negotiation.

Hogan also sees the possibility of structural and infrastructure change occurring in the traditional healthcare ecosystem in Medicare and Medicaid that is bipartisan in nature.