After years of escalating pressure and legislative debate, the Consolidated Appropriations Act of 2026 has finally landed, bringing with it a wave of reforms aimed at the powerful and often opaque world of Pharmacy Benefit Managers (PBMs). Employer groups, representing the health plans of more than 160 million Americans, have been quick to declare victory, celebrating new transparency mandates as a landmark achievement that promises to lower prescription drug costs. However, a closer look at the fine print reveals a more complex reality. While employers gained an unprecedented view into the PBM financial playbook, the most transformative changes were reserved for Medicare, leaving the fundamental structure of the commercial market largely untouched. This raises a critical question: Was this a decisive win, or merely a single battle in a much longer war?
The High-Stakes World of Pharmacy Benefit Management
Pharmacy Benefit Managers operate as crucial intermediaries in the U.S. healthcare system, negotiating drug prices with manufacturers on behalf of health plans, creating formularies, and processing prescription claims. Their influence is immense, shaping which drugs are covered and how much patients, employers, and insurers ultimately pay. Over the years, the industry has consolidated dramatically, with a few dominant players controlling the vast majority of the market.
This market power is amplified by vertical integration, a corporate structure where a single entity owns the PBM, a major insurance company, and affiliated specialty or mail-order pharmacies. This arrangement creates a complex web of financial incentives that has drawn scrutiny from lawmakers and employers alike. For the millions of Americans who receive health coverage through their job, the business practices of these integrated giants have a direct and often invisible impact on their out-of-pocket costs and access to necessary medications, making any reform in this space a matter of significant public interest.
A Tale of Two Reforms: Unpacking the New Legislation
The Celebrated Victory: A Leap Forward in Transparency
The passage of the Consolidated Appropriations Act was met with immediate and enthusiastic praise from employer coalitions that have long advocated for PBM oversight. Organizations like the ERISA Industry Committee (ERIC) and the Purchaser Business Group on Health (PBGH) hailed the legislation as a historic bipartisan achievement. At the heart of their celebration are new transparency rules that compel PBMs to provide employers with a level of detail previously unimaginable. Plan sponsors will now receive comprehensive reports detailing all covered drugs dispensed and identifying which prescriptions were filled by PBM-affiliated pharmacies.
Perhaps the most significant provision for the commercial market is the mandate requiring PBMs to pass through 100% of all rebates, discounts, fees, and other payments received from drug manufacturers directly to the employer’s health plan. This measure is designed to end the controversial practice of PBMs retaining a portion of these negotiated savings, ensuring that the full financial benefit flows back to the plan sponsors and, theoretically, their employees. For employers, this represents a tangible financial gain and a critical first step toward accountability.
The Medicare-Commercial Divide: What Employers Didn’t Get
While the transparency gains are substantial, the celebration is tempered by what the legislation failed to deliver for the commercial market. In a striking contrast, the most profound and structurally significant reforms were exclusively applied to the Medicare Part D program. Beginning in 2028, the law will fundamentally alter the PBM business model within Medicare by “delinking” their compensation from the list price of drugs. This change removes the incentive for PBMs to favor higher-cost medications, which has long been a core criticism of their model.
Furthermore, the act explicitly prohibits “spread pricing” in Medicare Part D, a practice where a PBM bills a health plan more for a drug than it reimburses the pharmacy, pocketing the difference. This practice will remain legal in the commercial market. Another major goal for employers—securing statutory fiduciary status for PBMs—also fell short. Granting PBMs fiduciary duty would have legally obligated them to act solely in the best financial interest of the employers they serve, a standard that would have transformed the power dynamic of their contractual relationships.
The Unresolved Conflicts: Navigating PBM Business Models
The new law, for all its strengths in transparency, does little to resolve the core conflicts of interest embedded in the PBM business model. The practice of tying PBM revenue to a percentage of a drug’s price remains a key concern in the commercial space, as it creates a direct financial incentive to favor more expensive drugs over more cost-effective alternatives. This misalignment means that what is profitable for the PBM is not always what is best for the employer’s bottom line or the patient’s out-of-pocket costs.
The issue of vertical integration also remains unaddressed. With PBMs, insurers, and pharmacies operating under one corporate roof, there are powerful motivations to steer patients toward their own affiliated pharmacies, even if those pharmacies are not the most convenient or affordable option. While the new law requires disclosure of affiliate pharmacy pricing, it does not prevent this self-dealing. Critics argue that transparency alone is insufficient; without measures to break up these integrated entities or prohibit certain practices, the underlying structural issues that drive up costs for employers will persist.
Beyond Congress: The Department of Labor Enters the Fray
Just as Congress passed its landmark legislation, another federal agency entered the PBM reform arena. The Department of Labor (DOL) has proposed its own rule aimed at bolstering disclosure requirements for PBMs serving employer-sponsored plans. This regulatory effort seeks to compel PBMs to reveal all sources of compensation, including revenue derived from spread pricing, directly to the plan fiduciaries responsible for managing employee benefits.
The DOL’s proposed rule could act as a powerful complement to the Consolidated Appropriations Act, filling in some of the transparency gaps left open by the legislation. It would empower fiduciaries with the ability to audit these disclosures and provide them with recourse for non-compliance. However, the future of this rule is not yet certain. Given its timing, it is possible the DOL may revise its proposal to more closely align with and enforce the new statutory requirements, creating a unified federal approach to PBM oversight.
The Next Frontier: What’s on the Horizon for PBM Oversight
With the passage of the new law, the legislative landscape has been reset, and the focus now shifts to the reforms that were left on the cutting room floor. The stark differences between the Medicare and commercial provisions have created a clear roadmap for future advocacy efforts. Employer groups are expected to renew their push for a federal ban on spread pricing in commercial plans and to once again champion the cause of making PBMs statutory fiduciaries.
Beyond these immediate goals lies a more ambitious and challenging objective: structural separation. A growing chorus of critics argues that the only way to truly eliminate the conflicts of interest inherent in the current system is to break up the vertically integrated healthcare conglomerates. This would involve legally separating PBMs from insurance companies and their affiliated pharmacies. While this remains a distant and politically difficult goal, it has entered the mainstream policy debate and will likely represent the ultimate frontier in the ongoing effort to reform the pharmaceutical supply chain.
The Final Verdict: A Measured Win in an Unfinished War
In the final analysis, employers have secured a meaningful and hard-fought victory. The new transparency mandates provide them with an unprecedented toolkit to scrutinize PBM performance and claw back 100% of manufacturer rebates. This newfound access to data and financial flows equips plan sponsors to be smarter purchasers and tougher negotiators, which should translate into tangible savings.
However, this win, while significant, remains a measured one. The law stops short of addressing the fundamental architecture of the PBM industry that incentivizes high drug costs and creates powerful conflicts of interest in the commercial market. The war against these misaligned incentives is far from over. Employers now stand better informed and more empowered, but the core business models of their PBM partners remain intact, setting the stage for the next round of legislative and regulatory battles.
