AH102 - PBM Reform Update: Health Policy Changes Slowly, Until it Doesn't, with Lloyd Fiorini

The beginning of 2026 brought a cavalcade of healthy policy updates. For years, pharmacy benefit manager (PBM) reform legislation has been discussed, particularly at the Federal level, but passage and implementation has been elusive. Then, in a matter of weeks, multiple major regulatory actions dropped in quick succession.

These recent changes touch everything from hidden PBM fees to pharmacy access, and employers now have the opportunity to more closely scrutinize the value a PBM can offer during the PBM procurement process. That said, it will still require employers to perform their due diligence as a fiduciary to make sure they are working with the right partner for their members.

In episode 102 of the Astonishing Healthcare podcast, host Justin Venneri invited Lloyd Fiorini (General Counsel & Chief Compliance Officer) into the studio to unpack these legislative developments. They also discussed what these changes mean for the pharmaceutical supply chain, how they impact pass-through PBM pricing, and what plan sponsors need to watch for next.

Department of Labor Proposed Rules for PBMs

At the end of January, the DOL announced proposed rules that introduce historic disclosure requirements for PBMs. These rules aim to close regulatory gaps left open by the Consolidated Appropriations Act (CAA) of 2021.

"What the DOL looked like they were doing were closing the gaps that were from the Consolidated Appropriation Acts of 2021, where including the PBMs, if you would, into the regulations that otherwise PBMs have been able to kind of avoid to a certain extent,” Lloyd explained. “So audit rights, initial disclosures, manufacturing rebates, all that type of information that otherwise was somewhat required in the CAA of 2021 but somehow lost at the same time."

Currently, RxDC reporting operates on an aggregate basis. The new DOL rule pushes for reporting on a specific client basis. This means employers will get a much clearer picture of the PBM rebate model and actual costs that are tied to their specific plan. For transparent PBMs, this won’t present a meaningful difference in how they do business.

How CAA 2026 Impacts Fiduciary-Aligned PBM Models

Shortly following the DOL rule announcement, the CAA 2026 was signed into law. While many assume this legislation only impacts Medicare Part D, it carries significant downstream effects for general and self-funded plans.

One of the most critical elements of CAA 2026 is the focus on a bona fide service fee. Under this rule, a PBM cannot extract hidden value from the dispensing of a product. Instead, they must operate strictly on an administrative fee. This is a massive step forward for anyone advocating for an aligned approach to pharmacy benefit administration.

The legislation also addresses broader business concerns:  

1. Anti-retaliatory requirements for pharmacies.

2. Pharmacy access protection to prevent pharmacy deserts.

3. Strict limitations on how a PBM extracts value from drug transactions.

One notable omission from the final bill was mandatory transparent pricing indexes, like NADAC. While it appeared in the Senate version, it was stripped from the final bill. However, industry experts expect this stipulation to return in future PBM transparency laws.

The FTC Settlement and Protecting Patients

While both the DOL rules and the CAA 2026 focus heavily on protecting plan sponsors and pharmacies from price gouging, the recent FTC settlement with Express Scripts takes a different angle, focusing on protecting the end consumer.

This settlement specifically targets formula programs and the handling of low Wholesale Acquisition Cost (WAC) and high WAC products. It places guardrails around how PBMs operate to protect the patient from inflated out-of-pocket costs.

As Lloyd notes, all these actions form a cohesive strategy.

"When you look at all of the activities of that period of time, it's one big holistic approach that has looked at the whole process of dispensing a product, where you protect pharmacies, you protect the members, you protect the plans, and each one has kind of highlighted certain aspects of it."

TrumpRx and the Push for Transparent Pricing

As if these developments weren’t enough, the White House also announced the creation of TrumpRx. This initiative offers 43 initial drugs through a cost-plus pricing model. While this generated significant buzz, it is currently limited to cash-paying patients; health plans can’t access this pricing for their beneficiaries.

What’s the next step, given that limitation? Lloyd explained, “I think if you look at what is now on the legislative agenda is to codify Most Favored Nation (MFN) pricing and let that apply. And I think that's the...initial second step, I should say, of what they're trying to accomplish with this.”

State-Level PBM Transparency Laws and Legal Battles

Federal changes are only half the story. Significant battles over conflicts of interest in PBMs are playing out at the state level, with legislators across the country focusing on everything from spread pricing to vertical integration, specifically when PBMs own pharmacies.

For example, Arkansas passed a law stating a pharmacy owned by a PBM will not receive a state pharmacy license. In response, several large PBMs sued to stay the enforcement of that law, citing constitutional arguments around equal protection. A federal court has temporarily halted the law.

“Tennessee is considering a very similar law, and CVS is very publicly opposing the passing of such a law because it will end up closing—and I don't know the specific number, but I think it's a heck of a lot more than the 23 pharmacies that CVS owned in Arkansas,” Lloyd said. “I think it's close to 150, if not more. I've seen some materials to suggest that what CVS is claiming is several million people may not get access to care if they pass this law. And I think the counter to that is that the independent pharmacies or the pharmacies that are not owned by PBMs feel that they're more than capable of filling in the gap that otherwise would be created by CVS leaving the marketplace.”

This tension is exactly why employers should be asking a critical question: how do transparent PBMs reduce healthcare costs? By removing the financial incentives tied to owning the dispensing pharmacy, a transparent PBM can focus solely on helping the plan sponsor achieve their ultimate goal: provide a quality, cost-effective benefit for their members.

Navigating the Future of PBM Reform

The volume of legislation passed in passed in early 2026 is truly astonishing. We now have a patchwork of state laws and a wave of new federal requirements. For employers, the message is clear: demand transparency, understand the flow of every dollar in your pharmacy benefit, and carefully evaluate your partners.

If you would like to learn more about Judi Health’s approach to transparent health benefit management, contact our team today!

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Reference Links

• US Department of Labor proposes historic pharmacy benefit manager fee disclosure rule (January 29)
• PBM Reforms Signed Into Law, Reshaping Medicare Part D Drug Pricing Transparency (February 3)
• FTC Secures Landmark Settlement with Express Scripts to Lower Drug Costs for American Patients (February 4)
• TrumpRx Launches (February 6)

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