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

Transcript

Lightly edited for clarity.

[00:22] Justin Venneri: Hello and thank you for joining us for another episode of the Astonishing Healthcare Podcast. This is Justin Venneri, your host and senior director of communications at Judi Health, and I'm excited to welcome Lloyd Fiorini back to the studio to talk about all the activity we've seen so far this year from a health policy and a PBM reform perspective. Lloyd joined us on our New Year's episode, which was really cool. We did a little round robin there. We'll link that in the show notes.

A Surprising Start to 2026 for Health Policy and PBM Reform

[00:46] Justin Venneri: This really has been a crazy start to the new year, Lloyd, from a volume of regulatory change and announcements perspective. Did you imagine we'd see this much this early on?

[00:56] Lloyd Fiorini: No, actually. We've been tracking the PBM reform that was running through Congress fairly closely. What surprised me was the DOL proposed rules coming out around the same time, followed by the FTC settlement with Express Scripts. And so that volume and those reforms, if you would, in a global sense, were completely surprising on the sequencing and how close they were all tied together.

[01:24] Justin Venneri: Yeah, it was all within about a week, right?

[01:26] Lloyd Fiorini: Yeah, exactly. And all very similar, but also different at the same time.

The Department of Labor's New Proposed Rules for PBMs

[01:31] Justin Venneri: Maybe we'll go in order just for simplicity's sake. The DOL, that was right at the end of January, Department of Labor announced the proposed rules that are pretty historic in terms of the disclosure requirements for pharmacy benefit managers. What's your reaction to that one? Or what are the key takeaways there? And then I probably have a quick follow-up for you.

[01:50] Lloyd Fiorini: 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. So audit rights, you know, 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. You know what I mean? I think that's what the proposed rules were intended to do.  

And then quickly following that, you have the Consolidated Appropriation Act of 2026, which I think also kind of overlays with the proposed rules. So it would be very interesting to see what comments come into the DOL proposed regulations and how they're going to reconcile some of the initiatives that they're proposing in their regulations and how those are going to kind of reconcile with what was in the 2026 PBM reform. So we'll have to wait and see how that plays out.

[02:55] Justin Venneri: And that comment period's open now. I mean, this episode will be out before March 31st. That's when it closes, right?

[03:01] Lloyd Fiorini: Yeah, that's right. And I'll be very interested to see how the DOL wants to reconcile certain dates that they propose versus what's in the statute.

The Future of RxDC Reporting

[03:10] Justin Venneri: Okay. And then this is interesting because right now, and we'll get into CAA 2026 in a second here, but we're working on stuff related to RxDC reporting, and it seems like there's a lot of overlap in the reporting requirements for RxDC and then what's required in these new proposed rules and regulations. Do you think that'll change a lot in 2027, probably?

[03:30] Lloyd Fiorini: Well, I think so, because what happened with the RxDC reporting is that it's more on an aggregate basis, right? And I think what you're going to see more from what the DOL is trying to get to is more on a client basis. So you're going to see more reporting specific to the clients as opposed to what you're able to do under RxDC.

[03:47] Justin Venneri: Interesting.

[03:48] Lloyd Fiorini: Yep. Okay.

The Consolidated Appropriations Act of 2026

[03:49] Justin Venneri: And then you alluded to it… The CAA 2026, February 3rd, we were watching, and it was out of nowhere Tuesday afternoon. Right. Boom. Signed into law.

[04:00] Lloyd Fiorini: Yeah. Yeah. That was amazing, really.

[04:02] Justin Venneri: What are the couple of key points there that you think everybody needs to key in on and be aware of?

[04:08] Lloyd Fiorini: Well, I think you have to look at it from the perspective of it impacts Medicare Part D as well as general plans. So you have the bona fide service fee, which I think is a hypercritical part of the legislation, where you cannot take any value from the dispensing of a product or any value from the drugs, as opposed to you just get paid by an administrative fee. And I think that's very important to kind of focus in on. It only extends to Medicare Part D, but I think there's some value to that as you look at our model as it relates to the entire lines of business that we service today.

[04:44] Justin Venneri: And that's really interesting because I think a lot of times regulations [are] passed and people are like, "Oh, it's just for Medicare Part D," or "Oh, it's just government programs” or something. But there are downstream effects of these things because you can't separate the impact it has. And it hopefully has some positive influence on transparency, right?

[05:02] Lloyd Fiorini: It will definitely have an impact on transparency, there's no doubt about it. There's also some applicability just to general business as well from a self-funded plan. So you have anti-retaliatory requirements for pharmacies, pharmacy access, all that type of concern that creates pharmacy deserts, if you would, of restricting access. And I think that plays out as well, that goes beyond Medicare Part D. There's a lot of detail in the Consolidated Appropriations Act of '26 that I think applies to all lines of business, not just Medicare.

[05:35] Justin Venneri: Cool.

A Future with Mandatory NADAC for Drug Prices?

[05:37] Justin Venneri: One thing that was missing that was present but got stripped out, just mandatory NADAC (national average drug acquisition cost) or, you know, some type of drug price index. Do you think that finds its way back into anything later this year?

[05:47] Lloyd Fiorini: Yeah, I think that will somewhere. I think that was, it wasn't in the House bill, but it was in the Senate bill, but it did get dropped. I think using a methodology that's transparent in pricing is really what's missing from the legislation. So that's one thing that I think we're going to be kind of looking for in the future and working with the Senate to get that back into play.

Related Content

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• How to obtain Rx data and what to do with it
• AH096 - A Quick Government Programs Update: The IRA & MPPP, Managing D-SNPs, and More, with Jason Barretto
• Signs it is time to change your PBM vendor, and how to overcome common hesitations

The FTC Settlement, a Focus on Patient Protection

[06:11] Justin Venneri: Okay, and then you mentioned the FTC settlement. I know we don't typically comment on settlements like this, but I just have to ask. I mean, any takeaways there that you can share that maybe are related to what was agreed to and how the terms align with these other regulations that we've seen come to pass now?

[06:28] Lloyd Fiorini: Well, you know, the FTC settlement I looked at more from a perspective of how does it protect the patient, the end consumer, more so than what the DOL regulations required or PBM reforms? Because PBM reforms were more geared for pharmacy access, protecting from price gouging, if you would, more so than anything else, and 100% of rebates passing through and blah, blah, blah.  

The FTC was more of a, if you have certain formulary programs, low WAC, high WAC products, you have to do certain things, you know what I mean? And I think it was meant to be more geared towards protecting the member. So 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, you know what I mean? The FTC settlement, and I think the other people that the FTC was looking at in their lawsuits - the insulin lawsuit, which are, you know, several other PBMs, probably are going to have similar consent orders. And I think you'll see similar types of actions in that regard.

TrumpRx

[07:41] Justin Venneri: Okay. And then TrumpRx was another big announcement that hit shortly thereafter the previously mentioned announcements and that generated a ton of buzz, of course. And I'll put reference links in the show notes for everybody in case you haven't seen some of these releases, announcements, articles, and such. But 43 initial drugs, transparent prices, cost-plus similar to other models out there. What are some of the key takeaways?

[08:07] Lloyd Fiorini: Yeah, so the TrumpRx is more geared towards the cash-paying member, patient, and the plans are not necessarily able to access that for the benefit of their beneficiaries through their plan benefit. It's kind of an initial step by the Trump administration to kind of provide better access to lower-cost pricing. But it's only, like you said, 43 products, right. They said there's more coming, but I think at the present time, they're only dealing with the cash-paying patient. What would be really great is that that pricing extends out into the, you know, insurance benefits, self-funded, whether it's commercial or what have you.  

I think if you look at what is now on the legislative agenda is to codify MFN pricing and let that apply. And I think that's the second step, initial second step I should say, of what they're trying to accomplish with this. But at the present time, TrumpRx is only going to be providing value to a consumer who's able to pay cash for their products. It's not necessarily going to extend too deep into the ecosystem, if you would, of insurance products.

State-Level PBM Reform Efforts, the Fight Over Pharmacy Ownership

[09:15] Justin Venneri: Okay, two more quick ones for you. You've already kind of given a couple of things to watch for so far, kind of how MFN plays out. And also earlier you were mentioning what you expect to see out of the DOL, the comment period. What would you say in terms of what more needs to be done? I know there's other activity going on at the state level, Tennessee recently, and that's ownership of pharmacies in the crosshairs again. But that didn't work in Arkansas because of, what am I forgetting?

[09:46] Lloyd Fiorini: The Arkansas law basically says that the PBM cannot own a pharmacy or will not get a pharmacy... like if a pharmacy is owned by a PBM, they won't get a pharmacy license. Right?

[09:55] Justin Venneri: That's right. That's right.

[09:56] Lloyd Fiorini: Okay, so several of the big PBMs that own pharmacies, specifically CVS, ESI, and Optum, have sued to stay the enforcement of the Arkansas law based on several constitutional arguments. One is that it's a taking, right? And that the equal protection laws of the Constitution have been violated because in the way that they wrote the law in Arkansas, it was clear that they were favoring Arkansas pharmacies versus non-Arkansas pharmacies.

[10:30] Justin Venneri: Okay.

[10:30] Lloyd Fiorini: That was the basis of their arguments. The federal court has stayed enforcement of the Arkansas law pending litigation. So that law is not necessarily being enforced today. 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. 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.

Whether that gets passed or not, I don't know. It creates an issue, I think, that has to be kind of reconciled, which is, what do you do for a member that is going to a CVS pharmacy and doesn't want to move versus, you know, access to another pharmacy? There are different mechanisms to attack the vertical integration, if you would. This one seems to be creating anxiety for whether access to care exists or not.

[11:50] Justin Venneri: Yeah. And I think Louisiana tried a version of this too, right? But that didn't...

[11:55] Lloyd Fiorini: That was not passed. That did not make it to legislation.

[11:59] Justin Venneri: Yeah, it's going to be... I guess it'll be interesting to see how some of the activity to protect local and independent pharmacies plays out. I mean, delinking is part of, you know, trying to delink the revenue sources.

[12:10] Lloyd Fiorini: Yeah, that delinking is an interesting aspect of it because you would have to basically provide cost-plus, right? There's other ways of identifying how the integrated PBM or healthcare company, if you would, can access or interfere with access to healthcare.

The Most Astonishing Thing…

[12:27] Justin Venneri: All right, last question, Lloyd. Thank you so much for taking the time today. The most astonishing or surprising thing that has kind of reared its head as we get into 2026 here and things take shape, health policy and PBM reform-wise?

[12:40] Lloyd Fiorini: You always ask me this question. Well, first of all, I mean, I think the DOL regulations are going to be very interesting for us to follow. What's astonishing to me is that all this stuff got passed within a week or two of each other and now we're trying to sift through all the details to find out what is actually at the heart of the issues.  

I think we've made a great step forward, but the work isn't done. You know what I mean? We still have a lot of a patchwork quilt, if you would, across the country on the state level, as well as some unfinished business on the federal level to get some PBM reforms through. But I think at the present time, we have a lot to get through as well. And that was, to me, the most amazing thing. It was like, snap, snap, snap, bang, bang, bang. Everything came through at the same time. So that was pretty exciting. It was pretty astonishing. I didn't expect that to happen, but, you know, there's still more to come, I'm sure.

[13:33] Justin Venneri: Cool. Well, Lloyd, we'll definitely stay in touch. And your Dallas Stars pick remains in play from the earlier...

[13:41] Lloyd Fiorini: You have that recorded, right?

[13:42] Justin Venneri: Yes, I do.

[13:43] Lloyd Fiorini: Yes, we do. All right. I wasn't sure about that. So I'm taking a lot of grief from people saying that, “You know, you abandoned Edmonton,” but Dallas is the team.

[13:53] Justin Venneri: Well, they're number two in Central [Division], so we'll see how that shakes out over the back half of the season here.  

All right, Lloyd, thank you very much. Have a great rest of your day.

[14:00] Lloyd Fiorini: I'll talk to you later.

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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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