Brandon Kessler on pharmacy pricing under CAA 2026 | PBMI 2026

As pharmacy benefit managers (PBMs) and plan sponsors begin planning for the 2028 implementation of the 2026 Consolidated Appropriations Act, one of the most visible near-term changes for payers will be how drug prices appear on paper, according to Brandon Kessler, a principal at Milliman. In an interview with Managed Healthcare Executive at the 2026 Pharmacy Benefit Management Institute Annual National Conference in Orlando, Kessler said plans that have historically seen high ingredient costs paired with low dispensing fees will see that relationship flip under a cost-plus pricing model, with dispensing fees rising and ingredient costs falling as pricing moves closer to actual acquisition cost.

That shift does not necessarily mean the new arrangement favors payers, Kessler said. It reflects a requirement for greater transparency into how prices are built, which translates into far more data than payers were managing under legacy pricing models. The CAA 2026 requires PBMs serving group health plans to pass through 100% of rebates, fees and other manufacturer compensation and to deliver detailed, plan-level reports on drug pricing, spread pricing and spending. For plans already struggling with pricing complexity, a cost-plus environment adds prices that can change day to day or month to month, giving employers another layer to track and reconcile against what they are ultimately paying.

Kessler said payers should not expect a smooth transition. Any time the pharmacy industry goes through a change of this scale, he said, there is an initial period of adjustment and uncertainty as PBMs work out how they will plan for and report under the new rules, on top of the day-to-day and month-to-month price movement that cost-plus arrangements introduce.

Kessler spoke with MHE after appearing on the panel “From Trust to Proof: The New Fiduciary Standard for Pharmacy Oversight.” He was joined on the panel by JT MacMannis, vice president of business development at Milliman and Andrew Timcheck, a principal and consulting actuary, also at Milliman.