Recent federal action is reshaping how pharmacy benefit managers (PBMs) do business and what that could mean for your prescription drug costs. Congress recently passed comprehensive reforms targeting PBMs as part of the Consolidated Appropriations Act, 2026, while the Federal Trade Commission (FTC) secured a landmark settlement with one of the nation's largest PBMs.
These new rules are designed to increase transparency and accountability in how PBMs operate, with the goal of ensuring that savings from drug discounts actually benefit patients and the Medicare program.
What are PBMs and Why Does this Matter?
Pharmacy benefit managers are companies that act as intermediaries between drug manufacturers, pharmacies, and health plans. They negotiate drug prices, decide which drugs are covered (the "formulary"), and process prescription claims. PBMs have faced criticism for keeping a portion of manufacturer rebates and discounts for themselves rather than passing those savings on to patients and health plans.
For people living with Sjögren's, who often rely on multiple medications to manage symptoms like dry eyes, dry mouth, joint pain, and fatigue, the cost and coverage of prescription drugs is a critical issue. These new developments aim to make the drug pricing system more transparent and fair.
What the New Law Does: Medicare Part D Reforms
Beginning January 1, 2028, PBMs serving Medicare Part D prescription drug plans must:
- Pass through all rebates and discounts: PBMs will be required to pass 100% of the rebates and discounts they receive from drug manufacturers to the Medicare drug plan-rather than keeping a portion for themselves.
- Limit PBM fees to flat-dollar amounts: PBM compensation must be a flat dollar fee for actual services performed. PBMs can no longer charge fees based on a percentage of a drug's price or tie their compensation to rebates, discounts, or formulary placement decisions. This "delinking" is intended to remove incentives for PBMs to favor higher-priced drugs.
- Provide detailed reports: PBMs must submit annual reports to drug plan sponsors and the government that include information on drug pricing, rebates, pharmacy reimbursements, and any financial relationships with affiliated pharmacies, brokers, or consultants.
- Create a way to report violations: The law establishes a confidential process for pharmacies, drug plans, manufacturers, and others to report potential PBM violations-with protections against retaliation.
These legislative reforms apply specifically to Medicare Part D prescription drug plans (including Medicare Advantage plans that offer drug coverage). They do not directly regulate PBMs operating in the commercial (employer-sponsored) or individual insurance markets. However, federal regulation of PBMs in Medicare may set a precedent that encourages states and Congress to pursue similar reforms for commercial plans in the future.
FTC Settlement: What It Could Mean for Commercial Insurance
The PBM industry is remarkably concentrated: although roughly 65 companies operate in the space today, just three of them process approximately 80% of all prescription drug claims. That concentration makes a recent Federal Trade Commission (FTC) settlement with one of the nation's largest PBMs especially noteworthy. While the new legislation focuses on Medicare, the FTC's action could carry broader implications for individuals covered by employer-sponsored or individual insurance plans.
The FTC alleged that the PBM's rebate practices encouraged drug manufacturers to keep list prices high. Here's why that matters to you: if your copay or coinsurance is based on a drug's list price rather than what the PBM actually pays for it from the drug manufacturer, you end up paying more out of pocket. The FTC estimates the settlement could reduce patient costs for drugs like insulin by up to $7 billion over 10 years.
Under the settlement, the PBM must offer plan sponsors (like employers and insurance companies) options that base your out-of-pocket costs on what the PBM actually pays for a drug, not the inflated list price. The PBM must also stop favoring high-cost versions of drugs when lower-cost identical versions are available.
It's important to note that these changes currently apply only to the one PBM covered by the settlement, and whether you see any benefit depends on what your employer or insurance plan chooses to do. The FTC has also brought cases against other major PBMs, but those have not yet been resolved. If similar settlements follow, the impact on the commercial market could be broader.
What This Means for Sjögren’s Patients
If you are enrolled in a Medicare Part D plan, these reforms are intended to make drug pricing more transparent and ensure that manufacturer discounts help lower costs for you and the Medicare program (beginning in 2028). While it is too early to predict the exact impact on individual drug prices or out-of-pocket costs, the law's focus on transparency and accountability is a meaningful step forward. For those with commercial insurance, these rules do not apply directly to your plan, but ongoing federal and state attention to PBM practices may lead to broader reforms in the future.
The Sjögren’s Foundation® will continue to monitor implementation of new legislation and the progression of the future FTC enforcement, and push for policies that make treatments more affordable and accessible for people living with Sjögren's disease. For more information on PBMs and the Sjögren's Foundation's work, please click here.
Recent federal action is reshaping how pharmacy benefit managers (PBMs) do business and what that could mean for your prescription drug costs. Congress recently passed comprehensive reforms targeting PBMs as part of the Consolidated Appropriations Act, 2026, while the Federal Trade Commission (FTC) secured a landmark settlement with one of the nation's largest PBMs.
These new rules are designed to increase transparency and accountability in how PBMs operate, with the goal of ensuring that savings from drug discounts actually benefit patients and the Medicare program.
What are PBMs and Why Does this Matter?
Pharmacy benefit managers are companies that act as intermediaries between drug manufacturers, pharmacies, and health plans. They negotiate drug prices, decide which drugs are covered (the "formulary"), and process prescription claims. PBMs have faced criticism for keeping a portion of manufacturer rebates and discounts for themselves rather than passing those savings on to patients and health plans.
For people living with Sjögren's, who often rely on multiple medications to manage symptoms like dry eyes, dry mouth, joint pain, and fatigue, the cost and coverage of prescription drugs is a critical issue. These new developments aim to make the drug pricing system more transparent and fair.
What the New Law Does: Medicare Part D Reforms
Beginning January 1, 2028, PBMs serving Medicare Part D prescription drug plans must:
These legislative reforms apply specifically to Medicare Part D prescription drug plans (including Medicare Advantage plans that offer drug coverage). They do not directly regulate PBMs operating in the commercial (employer-sponsored) or individual insurance markets. However, federal regulation of PBMs in Medicare may set a precedent that encourages states and Congress to pursue similar reforms for commercial plans in the future.
FTC Settlement: What It Could Mean for Commercial Insurance
The PBM industry is remarkably concentrated: although roughly 65 companies operate in the space today, just three of them process approximately 80% of all prescription drug claims. That concentration makes a recent Federal Trade Commission (FTC) settlement with one of the nation's largest PBMs especially noteworthy. While the new legislation focuses on Medicare, the FTC's action could carry broader implications for individuals covered by employer-sponsored or individual insurance plans.
The FTC alleged that the PBM's rebate practices encouraged drug manufacturers to keep list prices high. Here's why that matters to you: if your copay or coinsurance is based on a drug's list price rather than what the PBM actually pays for it from the drug manufacturer, you end up paying more out of pocket. The FTC estimates the settlement could reduce patient costs for drugs like insulin by up to $7 billion over 10 years.
Under the settlement, the PBM must offer plan sponsors (like employers and insurance companies) options that base your out-of-pocket costs on what the PBM actually pays for a drug, not the inflated list price. The PBM must also stop favoring high-cost versions of drugs when lower-cost identical versions are available.
It's important to note that these changes currently apply only to the one PBM covered by the settlement, and whether you see any benefit depends on what your employer or insurance plan chooses to do. The FTC has also brought cases against other major PBMs, but those have not yet been resolved. If similar settlements follow, the impact on the commercial market could be broader.
What This Means for Sjögren’s Patients
If you are enrolled in a Medicare Part D plan, these reforms are intended to make drug pricing more transparent and ensure that manufacturer discounts help lower costs for you and the Medicare program (beginning in 2028). While it is too early to predict the exact impact on individual drug prices or out-of-pocket costs, the law's focus on transparency and accountability is a meaningful step forward. For those with commercial insurance, these rules do not apply directly to your plan, but ongoing federal and state attention to PBM practices may lead to broader reforms in the future.
The Sjögren’s Foundation® will continue to monitor implementation of new legislation and the progression of the future FTC enforcement, and push for policies that make treatments more affordable and accessible for people living with Sjögren's disease. For more information on PBMs and the Sjögren's Foundation's work, please click here.