Federal PBM Reform Is Here: What Employers and Plan Sponsors Need to Know in 2026

If you sponsor a health plan, 2026 just became the most consequential year in pharmacy benefits in recent memory. On February 3, 2026, President Trump signed the Consolidated Appropriations Act of 2026 into law, containing the most sweeping federal PBM reforms ever passed.

Hot on its heels, the FTC announced a settlement with Express Scripts the very next day. And the Department of Labor has a proposed rule in the pipeline that could further reshape how your plan's pharmacy benefits are managed. So what does all of this mean for your organization?

Why This Matters Right Now

For years, pharmacy benefit managers have operated as powerful intermediaries between drug manufacturers, insurers, and patients, often in ways that made it nearly impossible for employers to know what they were actually paying for.

The new law passed with a bipartisan 71-to-29 Senate vote, a clear sign that frustration with PBM opacity has reached a tipping point in Washington.

The Congressional Budget Office estimates the reforms will reduce the federal deficit by $2.12 billion over 10 years. But the bigger story for employers is what this means for plan transparency and cost accountability. Spread pricing, rebate retention, and opaque service fees have quietly inflated drug costs for employer-sponsored plans for years. That's about to change.

Key Insights Every Benefits Manager Should Understand

Rebates Now Have to Flow Through to Your Plan

Under the new law, PBMs must pass 100% of rebates, fees, and other remuneration from drug manufacturers directly back to ERISA-governed plans. That's a significant shift. Previously, PBMs could retain a portion of those rebates as revenue, which created incentives to favor higher-list-price drugs on formulary. If your plan's PBM hasn't been passing rebates through, you've been leaving money on the table.

Flat Service Fees Replace Percentage-Based Compensation (Starting 2028)

For Medicare Part D, the law requires PBMs to be compensated only through flat, bona fide service fees by 2028. No more pay tied to drug list prices. This delinks PBM revenue from the cost of medications, removing the perverse incentive to prefer pricier drugs. Commercial plan sponsors should watch closely, as similar contract terms may become the new industry standard.

You'll Finally Get Real Transparency Reports

PBMs will be required to deliver detailed semiannual reports to plan sponsors covering net drug spend, rebates received, and spread pricing arrangements. You'll also see disclosures when plan designs steer patients toward PBM-owned pharmacies. This is the kind of data most employers have been asking for but struggling to get.

Action Steps for Employers and Plan Sponsors

Here's what you should be doing right now:

• Request a PBM contract review. Ask specifically about rebate pass-through language and whether your current contract aligns with the new federal standards. Don't wait for your renewal cycle.

• Track the DOL proposed rule. The comment period closes March 31, 2026. If finalized, expanded ERISA disclosure requirements could take effect for plan years starting July 1, 2026. Your benefits counsel should be on top of this.

• Evaluate transparent or pass-through PBM models. The new law reinforces why many employers are already moving toward PBMs that operate on flat fees and full transparency. If you haven't done a market comparison recently, now's the time.

• Consult a pharmacy benefits expert. The implementation timeline is complex, with different provisions taking effect between 2026 and 2029. Having a knowledgeable advisor in your corner helps you stay ahead of the changes and avoid costly missteps.

The Bottom Line

The 2026 PBM reform represents a genuine turning point for employer-sponsored pharmacy benefits. Greater transparency, rebate pass-through, and fairer pharmacy access aren't just policy wins. They're practical tools your plan can use to reduce costs and improve outcomes for your employees.

The catch is that navigating the implementation timeline and contract implications takes real expertise.