In early 2026, Congress passed big changes to laws governing pharmacy benefit management pricing practices and operational transparency. Let’s talk about these changes, what they mean for your business and how you can prepare.
What is PBM reform?
Most employer-sponsored health plans use a pharmacy benefit manager (PBM) to administer pharmacy benefits. PBMs play a critical role in your benefits system, creating pharmacy networks, developing formularies, negotiating prices and much more. They influence medication cost, as well as how that medication is prescribed, used and delivered across a health plan.
In February 2026, Congress passed the Consolidated Appropriations Act of 2026, which includes reforms to how group health plans contract with PBMs. The goal is to reduce drug and pharmacy benefit costs by increasing transparency in PBM pricing models and applying federal standards to contract negotiations. Implementation of these changes has big implications for PBMs and the organizations they partner with on a contractual, compliance and operational level.
Why PBM reform is happening now
For decades, there’s been little oversight on how benefit management partners structure their compensation models, allowing some PBMs to profit from undisclosed revenue streams. A common approach is spread pricing, a practice in which PBMs charge employers a higher price for a drug than they paid the pharmacy then pocketing the difference.
This lack of transparency increases prices of prescription drugs for employers and their employees, especially for specialty drugs, including popular GLP-1 medications and medicine for chronic condition management. Employers campaigned for federal pharmacy benefit management standardization, and legislators passed sweeping PBM reforms within the Consolidated Appropriations Act of 2026.
What changed with PBM reform in 2026
Prescription drug prices are the highest they’ve ever been. Unregulated PBM pricing practices have contributed to that inflation, making benefits more costly. PBM reform addresses this issue with changes that include:
- Transparent, rebate pass-through models
- Detailed reporting requirements
- Auditability and data access
- Increased emphasis on fiduciary oversight and employer responsibility
When do PBM reform changes go into effect?
Unless specified, most of these reforms go into effect from Jan. 1 of 2028 to Jan. 1 of 2029. This gives PBMs time to restructure their practices and employers time to prepare for compliance, administrative and contractual changes.
How PBM reform impacts employers
PBM reforms increase both the responsibility and autonomy held by employers.
Most employer-sponsored health plans are legally required to meet minimum standards set by the Employee Retirement Income Security Act (ERISA). Before PBM reforms, murky PBM contracts sometimes shielded employers from liability when plans failed to meet ERISA minimums.
Now, employers will receive transparency data about plan use and cost from their PBMs. They’ll have the ability to audit, review and act upon the information they receive, making it easier to design more effective plan options and control costs.
What employers need to know about new reporting and transparency requirements
Under the Consolidated Appropriations Act of 2026, employers get expanded access to claims and rebate data. In 2028, PBMs must provide standardized, detailed reports twice a year (or quarterly if contractually obligated). This transparency data will include:
- A plan’s gross and net prescription drug spending
- Disclosure of manufacturer rebates and fees
- Disclosure of spread pricing agreements with network pharmacies, and reimbursement amounts
- Benefit design and drug formulary structure
- Disclosure of drug dispensing through PBM-affiliated pharmacies
- Out-of-pocket cost numbers for members
For many PBMs, these expectations will require meaningful change to the way they operate. However, some organizations offering PBM services, like HealthPartners, have been practicing these new standards for years and won’t need to play catch-up. At HealthPartners, these reforms reinforce the way our pharmacy model is already built, focusing on transparency in reporting, audit support and incentives focused on lowering net cost.
How PBM contracts and compliance requirements are changing
Due to these major reforms, PBMs will not be allowed to enter contracts that limit their ability to provide mandatory reports. This limit also applies to PBMs’ upstream contracts, meaning each party has to share information. The result will lead to an industry-wide shift toward rebate pass-through and transparent pricing models that include more defined audit rights and additional compliance practices.
What PBM reform means for employees and access to medications
The Consolidated Appropriations Act of 2026 allows pharmacy benefit systems to focus more on value-based care rather than rebate-driven formularies. This reform was created to stabilize the market, regulating PBM practices that inflated drug costs. With guard rails in place to help mitigate this, employees will have better access to the medications they need at a predictable, affordable cost.
Getting started: What employers can do next
Navigating reforms may be challenging. Having the right team or partner behind you is essential. The first important step is to assess whether current PBM arrangements need to be renegotiated or rebid. Your broker, consultant or legal team will help you understand what changes apply to your plan, including what reporting you’ll receive and what to do with it.
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