PBM reform has become one of the most closely watched issues in the U.S. prescription drug market. Pharmacy Benefit Managers (PBMs) sit between insurers, drug manufacturers, pharmacies, and patients, influencing how prescription drugs are priced, covered, reimbursed, and accessed.

PBMs were originally developed to help insurers manage prescription drug benefits and negotiate lower costs. However, their growing influence has sparked concerns about transparency, rebates, pharmacy reimbursement, competition, and patient access to affordable medications.

The political debate surrounding PBM reform has continued to evolve, with federal regulators, lawmakers, pharmacies, healthcare organizations, and patient advocates pushing for changes to how PBMs operate.

This guide explores the role of PBMs, the major issues driving the reform debate, recent federal actions, state-level efforts, and what meaningful PBM reform could look like going forward.

What Are Pharmacy Benefit Managers?

Pharmacy Benefit Managers are companies that manage prescription drug benefits on behalf of health insurers, employers, government programs, and other healthcare organizations.

Their responsibilities can include:

• Negotiating rebates and discounts with drug manufacturers

• Developing prescription drug formularies

• Establishing pharmacy networks

• Managing prescription drug benefits

• Implementing utilization management programs

• Processing and managing pharmacy claims

• Negotiating reimbursement arrangements with pharmacies

Because PBMs occupy an important position within the pharmaceutical supply chain, their decisions can influence what patients pay, which pharmacies they can use, and which medications are covered by an insurance plan.

This central role is one reason PBM reform has become an important policy issue.

Why Is PBM Reform Necessary?

Supporters of PBM reform argue that the industry needs greater transparency and accountability.

Critics have raised concerns about practices involving rebates, pharmacy reimbursement, spread pricing, formulary decisions, and relationships between PBMs and affiliated companies.

However, the PBM industry maintains that PBMs provide important services to payers and patients, including negotiating discounts and managing prescription drug benefits.

The debate is therefore not simply about whether PBMs are useful. It is about how their business practices should be structured and regulated to ensure that savings and competition benefit patients and pharmacies.

The Transparency Problem

One of the biggest concerns surrounding PBMs is the complexity of their contracts and financial arrangements.

Patients, employers, pharmacies, and even other healthcare stakeholders may have difficulty determining how much money moves through the prescription drug supply chain and where negotiated savings ultimately go.

Greater transparency could make it easier to understand:

• Drug prices

• Manufacturer rebates

• PBM fees

• Pharmacy reimbursement

• Spread pricing

• Formulary decisions

• Administrative costs

Improving transparency is therefore a major component of the PBM reform debate.

The Current Political Landscape

PBM reform has attracted attention from both federal and state policymakers.

The debate has included legislative proposals, regulatory investigations, enforcement actions, and efforts to change how prescription drug benefits are administered.

The political landscape has also shifted as federal regulators have taken increasingly aggressive action against some of the largest PBMs.

Rather than being limited to proposed legislation, PBM reform is now also being pursued through regulatory enforcement and settlements.

FTC Action Against Major PBMs

The Federal Trade Commission (FTC) has been a major player in the recent PBM debate.

The FTC has pursued cases involving the country's largest PBMs, including Caremark, Express Scripts, and Optum Rx, alleging anticompetitive and unfair practices related to insulin pricing and rebates.

The FTC reported that it secured a settlement with Express Scripts in February 2026. According to the agency, the settlement requires changes intended to increase transparency, reduce certain patient costs, and provide additional revenue opportunities for community pharmacies.

In July 2026, the FTC announced another major settlement involving Caremark Rx and Zinc Health Services. The agreement requires changes to Caremark's business practices, including measures intended to increase transparency, lower patient out-of-pocket costs, and ensure fairer treatment of community pharmacies.

These developments demonstrate that PBM reform is no longer only a legislative discussion. Federal regulatory enforcement is also shaping the future of the PBM industry.

 PBM Controversies and FTC Legal Battles

Medicare Part D and Prescription Drug Reform

Medicare Part D has also undergone major changes that affect the broader prescription drug landscape.

The Inflation Reduction Act introduced significant changes to Medicare prescription drug coverage. In 2025, the annual out-of-pocket threshold for covered Part D drugs was set at $2,000. For 2026, CMS adjusted that threshold to $2,100.

These changes are important to the broader discussion about prescription drug affordability because they alter how costs are distributed among beneficiaries, plans, manufacturers, and the federal government.

The Medicare Part D changes do not constitute PBM reform by themselves, but they are part of the wider policy environment surrounding prescription drug pricing and access.

State-Level PBM Reform

Federal action is only one part of the reform movement.

States have also taken steps to regulate PBM practices. Depending on the jurisdiction, state policies may address issues such as:

• PBM licensing and reporting requirements

• Pharmacy reimbursement

• Pharmacy audit practices

• Spread pricing

• Network requirements

• Transparency

• Patient access to pharmacies

State approaches vary considerably, which means that the regulatory environment for PBMs can differ depending on where a pharmacy, patient, insurer, or employer operates.

For independent pharmacies in particular, state-level policies can have a significant impact on reimbursement and business operations.

Key Issues Driving the PBM Reform Debate

Several recurring issues continue to shape the discussion around PBM reform.

1. Lack of Transparency

PBM contracts and financial arrangements can be complex. Critics argue that limited visibility into rebates, fees, and reimbursement makes it difficult to determine how much value is being created and who ultimately benefits.

2. Rebates and Drug Pricing

PBMs negotiate rebates from manufacturers for certain medications.

Critics argue that rebate structures can create incentives that do not always align with lower patient costs. PBMs, meanwhile, argue that their negotiations help insurers manage prescription drug spending.

The relationship between list prices, rebates, net prices, insurance benefits, and patient cost-sharing is complicated, making this one of the most contested areas of PBM reform.

3. Independent Pharmacy Reimbursement

Independent pharmacies have raised concerns about reimbursement rates, contract terms, audits, and other PBM practices.

When reimbursement does not adequately cover acquisition and operating costs, pharmacies may face financial pressure. This can be particularly significant in communities where patients depend on independent pharmacies for convenient access to medications and healthcare services.

4. Spread Pricing

Spread pricing occurs when a PBM charges a health plan one amount for a prescription while reimbursing the pharmacy a lower amount and retaining the difference.

Critics argue that spread pricing can make it difficult for employers and other payers to understand the true cost of pharmacy services.

Some states have moved to restrict or regulate this practice, particularly in public insurance programs.

5. Formulary Decisions and Patient Access

PBMs play a major role in developing formularies and determining how medications are covered.

Formulary decisions can affect which drugs patients can access and how much they pay. Utilization management tools such as prior authorization, step therapy, and quantity limits can also influence access.

Reform discussions therefore increasingly consider whether these tools are being used appropriately while maintaining affordability and patient safety.

What Could Effective PBM Reform Look Like?

There is no single solution to the complex problems surrounding PBMs. Meaningful PBM reform could involve several complementary approaches.

Increase Transparency

Policymakers could require clearer reporting of:

• Manufacturer rebates

• PBM fees

• Pharmacy reimbursement

• Administrative charges

• Spread pricing arrangements

• Related-party transactions

Greater transparency would give employers, insurers, policymakers, pharmacies, and patients a clearer picture of how prescription drug spending moves through the system.

Improve Pharmacy Reimbursement

Reform efforts could also focus on ensuring that pharmacies are reimbursed fairly for the medications and services they provide.

This may be particularly important for independent pharmacies that operate with smaller financial margins.

Strengthen Competition

Antitrust enforcement and competition policies can help address concerns about excessive market concentration.

Regulators may need to examine relationships between PBMs, insurers, pharmacies, and other affiliated businesses to determine whether those relationships create conflicts of interest or restrict competition.

Protect Patients From Excessive Costs

Prescription drug reforms should ultimately focus on patients.

Potential approaches include improving benefit design, increasing price transparency, reducing unnecessary administrative barriers, and ensuring that negotiated savings translate into meaningful affordability improvements where appropriate.

Strengthen Regulatory Oversight

Federal and state regulators can continue monitoring PBM practices and enforcing existing laws.

Recent FTC actions involving Express Scripts and Caremark demonstrate how regulatory enforcement can become an important component of PBM reform.

How Stakeholders Can Support PBM Reform

PBM reform affects more than PBMs themselves. Patients, pharmacists, pharmacy technicians, employers, insurers, manufacturers, and policymakers all have a stake in the outcome.

Patients

Patients can share their experiences with prescription costs, coverage restrictions, pharmacy access, and medication affordability.

Patient experiences can help policymakers understand how complex benefit structures affect people in real-world situations.

Pharmacists and Pharmacy Technicians

Pharmacy professionals can contribute by documenting how PBM policies affect dispensing, reimbursement, patient access, and pharmacy operations.

Professional associations and advocacy organizations can also provide opportunities to participate in policy discussions.

Employers

Employers that sponsor health benefits can ask PBMs for greater transparency regarding fees, rebates, pharmacy networks, and benefit administration.

They can also evaluate whether their pharmacy benefit arrangements provide meaningful value to employees.

Policymakers

Lawmakers can examine the evidence surrounding PBM practices and consider policies that promote transparency, competition, fair pharmacy reimbursement, and affordable medication access.

The Future of PBM Reform

The future of PBM reform will likely involve a combination of legislation, regulation, enforcement, industry changes, and continued public pressure.

Recent federal actions demonstrate that the landscape is already changing. The FTC's settlements with Express Scripts and Caremark show that major PBMs are facing regulatory pressure to modify certain business practices.

At the same time, Medicare prescription drug reforms continue to change the economics of the U.S. prescription drug market. For 2026, CMS established a $2,100 annual out-of-pocket threshold for covered Part D drugs.

However, regulatory action alone will not resolve every concern surrounding PBMs. The long-term effectiveness of PBM reform will depend on whether changes actually improve transparency, competition, pharmacy sustainability, and patient access to affordable medications.

Conclusion

PBM reform has moved from being a relatively specialized healthcare policy issue to becoming a major part of the national conversation about prescription drug affordability.

PBMs perform important functions within the U.S. healthcare system, but concerns about transparency, rebates, pharmacy reimbursement, competition, and patient costs have created growing pressure for change.

Recent FTC enforcement actions, Medicare Part D changes, and state-level initiatives demonstrate that the prescription drug landscape is evolving.

The path forward will require policymakers, regulators, healthcare professionals, employers, patients, and industry stakeholders to examine the evidence and work toward reforms that encourage competition while keeping patients and sustainable pharmacy care at the center.

The ultimate measure of successful PBM reform should be whether the prescription drug system becomes more transparent, competitive, accessible, and affordable for the people who depend on it.

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