Recent Capitol Hill Activity on PBMs

Context and Background

Pharmacy Benefit Managers (PBMs) act as intermediaries in the prescription drug supply chain, negotiating rebates and discounts from manufacturers and determining coverage and pricing for insurers, employer health plans, Medicare Part D, and Medicaid. PBMs have drawn criticism for a lack of transparency in how they retain rebates and fees, their use of “spread pricing,” and potential incentives that favor higher list prices for drugs. Federal policymakers have scrutinized these practices as part of broader efforts to address rising prescription drug costs and improve accountability in the drug supply chain.

1. Legislative Action: PBM Reforms Passed Into Law

In February 2026, Congress included significant PBM reform provisions in the Consolidated Appropriations Act of 2026, which was signed into law by the President. These reforms represent one of the most comprehensive federal efforts to regulate PBMs to date and mark a shift from longstanding debate to enforceable statutory requirements.

Key Provisions

• - Mandatory Pass-Through of Rebates and Fees: PBMs must remit 100 % of rebates, fees, alternative discounts, and other remuneration they receive from manufacturers, group purchasing organizations, and similar entities to their plan clients. This aims to eliminate practices where PBMs retain a portion of rebates for profit.
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• - Enhanced Transparency and Reporting: PBMs are required to provide detailed, semiannual reports to group health plans, with the option for quarterly reporting upon request. These reports must include gross and net drug spending figures, rebate and fee data, spread pricing arrangements, formulary placement rationales, and other relevant financial and design information.
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• - Audit and Disclosure Requirements: Plan fiduciaries can audit PBM rebate records, subject to confidentiality protections, and PBMs must structure their upstream contracts to enable required disclosures.
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• - Standardized Reporting and Enforcement: The Departments of Health and Human Services, Labor, and Treasury are directed to establish a standard reporting format and issue regulations to implement the law’s requirements, with civil monetary penalties for non-compliance.
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• - Medicare Part D Changes: For Medicare Part D plans, PBM compensation must be provided in the form of flat, bona fide service fees that are not tied to drug prices, rebates, formulary decisions, or referral volumes, reducing incentives to prefer higher-priced drugs.

2. Ongoing Oversight and Scrutiny

Even with recent statutory changes, Capitol Hill scrutiny of PBMs continues:

• - Congressional Hearings: A House subcommittee has scheduled hearings examining broader prescription drug pricing, including PBMs, drug manufacturers, pharmacists, and employer plan sponsors. These hearings reflect sustained interest in understanding and addressing systemic cost drivers in the drug supply chain.
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• - Member-Led Advocacy: Individual members of Congress, such as Representative August Pfluger, have publicly advocated for stronger PBM oversight and anti-competitive practice reforms at the federal level, aligning with state concerns about transparency and cost impacts.
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• - Regulatory Initiatives: In parallel with legislative reforms, the Department of Labor has proposed rules to increase disclosure requirements and potentially broaden fiduciary responsibilities for PBMs, particularly in ERISA-governed plans.
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• - Stakeholder Pressure: Pharmacy associations, employers, and patient advocacy groups have actively engaged Capitol Hill to press for PBM reform, emphasizing improved transparency, fair reimbursement, and patient access.

3. Broader Implications

The recent statutory reforms mark a turning point in federal policy on PBMs by codifying transparency and accountability measures that were previously only debated or advanced in narrower contexts. While these actions do not directly set price controls, they aim to align PBM incentives with plan sponsors and patients, reduce opaque revenue practices, and improve visibility into drug pricing dynamics. Continued oversight, regulatory rulemaking, and future legislation may further refine the federal approach to PBM regulation.

Summary of Major Trends

• - From Debate to Law: After years of discussion, Congress has enacted enforceable PBM reforms.
• - Focus on Transparency: New legal requirements mandate detailed reporting and disclosure of PBM financial practices.
• - Alignment of Incentives: Changes to compensation structures, especially in Medicare Part D, aim to lessen rebate-driven incentives.
• - Continued Oversight: Hearings and regulatory activity signal ongoing attention to PBM conduct.
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Ahead of Federal PBM Reform - Built for What the Market Is Becoming

The Market Is Changing

Recent federal PBM reforms are focused on:

• - Eliminating rebate retention and spread pricing
  
• - Increasing transparency and reporting requirements
• - Reducing conflicts of interest tied to vertical integration
• - Shifting toward flat, fee-based compensation models
• - Strengthening fiduciary accountability to employers and plan sponsors

Many legacy PBMs must now redesign their financial models to comply. FairosRx was built this way from the beginning.

Why FairosRx Is Ahead of the Curve

Transparent, Pass-Through Financial Model

• - 100% pass-through approach aligns with new rebate reform requirements
• - No reliance on hidden rebate retention or spread pricing
• - Clear visibility into true net drug costs
• - No disruptive overhaul needed to meet reform standards
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Result: Immediate compliance alignment and reduced regulatory risk for employer clients.

No Vertical Integration or Dispensing Conflicts

• - We do not own a mail-order pharmacy
• - We do not own a specialty pharmacy
• - We do not steer members to affiliated entities
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Channel selection is based solely on:

• - Lowest net cost
• - Clinical appropriateness
• - Member access and experience
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The FairosRx name/brand is recognized and accepted at pharmacies nationwide.

Result: Structural independence that aligns directly with federal scrutiny of PBM-owned pharmacy models.

Compensation Aligned With Fiduciary Expectations

• - Client fees not tied to drug list price inflation
• - Client fees not dependent on rebate volume
• - No internal margin from dispensing assets
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This mirrors the direction of Medicare Part D reforms moving toward flat service fee compensation.

Result: Employers can confidently demonstrate fiduciary prudence in vendor selection.

Transparency That Brokers and Employers Can Actually Use

• - Simplified contracting
• - Clear reporting structures
• - Real cost visibility tools for members and plan sponsors
• - Data that supports informed decision-making
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As federal reporting requirements increase, employers will need partners who can help interpret and operationalize that data.

Result: FairosRx becomes not just a PBM, but a transparency partner.

Consulting and Strategic Advisory Value

The new legislative environment creates complexity and opportunity.

FairosRx supports brokers and employers with:

• - Guidance on how federal reforms impact plan strategy
• - Evaluation of legacy PBM contracts under new regulatory standards
• - Identification of cost savings opportunities in a post-rebate model
• - Strategic pharmacy benefit redesign
• - Ongoing cost containment and utilization management consulting
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Result: We elevate the conversation from “PBM vendor” to strategic pharmacy advisor.

Competitive Positioning

FairosRx is not reacting to reform — we are already aligned with it.

While traditional PBMs are restructuring legacy rebate and vertically integrated models, FairosRx offers:

• - A structurally independent model
• - Transparent economics
• - Compliance-ready infrastructure
• - A conflict-free channel strategy
• - Advisory expertise for navigating reform

Value to Brokers and Employer Partners

• - Reduced compliance risk
• - Stronger fiduciary positioning
• - Improved cost predictability
• - Clearer financial reporting
• - Enhanced member trust
• - A forward-looking pharmacy strategy aligned with federal policy direction

Positioned For The Future

The PBM landscape is shifting toward transparency, independence, and accountability. FairosRx was built for that future.

We provide not only a compliant solution — but a strategic advantage for brokers and employers navigating a rapidly evolving regulatory environment.