Judi Health Policy Update – It’s a Tangled Web of Progress
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2026 got off to a surprisingly hot start, health policy-wise. Specifically, there were several important developments during the final week of January and the first week of February that will impact our industry in different ways. We’re calling it, “The week everything changed for healthcare.”
- FTC Secures Landmark Settlement with Express Scripts to Lower Drug Costs for American Patients (February 4)
- TrumpRx Launches (February 6)
More recently, we saw the proposed FTC settlement with CVS (March 23) and think it could ultimately resemble the FTC-Express Scripts settlement.
The DOL is closing long-standing gaps.
The Department of Labor (DOL) is moving to close longstanding gaps in how ERISA fee disclosure obligations apply to pharmacy benefit managers. The comment period for the DOL’s fee disclosure rule closed on April 15 with well over 500 comments, including a comment letter submitted by our independent advisory firm, Judi Group. The DOL appears to be trying to “close a gap” left from the Consolidated Appropriations Act of 2021, according to Lloyd Fiorini, Judi Health’s General Counsel and Chief Compliance Officer, which created ongoing uncertainty over whether PBMs are subject to ERISA’s service provider disclosure requirements in the same way as benefits consultants under ERISA §408(b)(2).
This is important for several reasons, but most of all, plan fiduciaries would need to conduct a “reasonableness” evaluation of the PBM fees earned from the plan. To do this, they need consistent, comparable data and disclosures from their PBMs. Whether the rule will be extended and clarified to include Third Party Administrators (TPAs) and data on drugs used on the medical side (and medical benefits more broadly) remains to be seen.
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The CAA 2026 is a milestone moment for patients, employers, and plan sponsors.
The bill shifts the incentives in the current PBM system away from opaque pricing and rebate-driven profit toward transparency, requiring that all manufacturer rebates be passed through to plans and PBM contracts and reporting be transparent, and it helps restore trust and put patients and payers first in benefit design.
Signed into law immediately on the heels of the DOL’s announcement by Trump, it impacts Medicare Part D as well as general plans. The bona fide service fee aspect of the legislation is “hypercritical,” because it dramatically alters PBM economics. Under CAA 2026, PBMs may be compensated only through flat, fair market value administrative fees for clearly defined services actually performed. Compensation linked to drug prices or utilization—including retained rebates, spread pricing, percentage‑of‑cost fees, and other price-based remuneration—is effectively prohibited.
As Fiorini explains, “You cannot take any value from the dispensing of a product or any value from the drugs. You [a PBM] just get paid an administrative fee.” The administrative fee restriction of the Act is limited to Medicare Part D plans, but its most transformative effects are felt in the commercial market, where PBM practices have historically been shaped by a fragmented web of state laws and opaque contracting norms.
The FTC’s announced settlement with ESI and proposed settlement with CVS are groundbreaking.
The Federal Trade Commission’s (FTC) settlement with Express Scripts represents a meaningful step toward increasing transparency, reducing patient costs, and protecting access to lower priced medication alternatives. The agreement targets specific PBM practices that have historically disadvantaged lower‑cost drugs and distorted incentives in formulary design, reflecting a broader regulatory shift toward delinking revenue from drug prices.
The delinking, transparency, and equitable access provisions in the FTC’s settlement with ESI align closely with broader regulatory trends and with how we believe pharmacy benefits should operate. If the CVS settlement follows suit, as expected, we do not anticipate any negative impact on clients; in fact, if the terms of our contract and the pass-through from Ascent improve, it could be positive.
The TrumpRx drug list is expanding.
TrumpRx is live, and now includes 80+ drugs, an increase from 43 when it started. Despite skepticism and criticism of the model, it reinforces our message that drug prices should be set by the market, or a neutral party, without incentives to mark-up prices or create confusion for patients.
We know that the cost of drugs impacts the quality of life for many Americans. Nobody should have to worry about how much a medication costs, why it costs what it does, or be forced to walk away from a prescription at the pharmacy counter. It’s a tailwind for us and provides visibility to competitive net prices on branded medications, which enables patients to gain confidence and improve their healthcare experience.
States Continue to Embrace NADAC-Based Pharmacy Reimbursement
States continue to move toward acquisition cost- and NADAC‑based pharmacy reimbursement to promote transparency and ensure pharmacies are reimbursed at or above drug acquisition costs. In 2026, Kansas enacted SB 20, requiring PBMs and health plans to reimburse pharmacies at NADAC when available and pay a $10.50 dispensing fee, while Louisiana’s Directive 257 mandates reimbursement of no less than NADAC with a $9.00 dispensing fee. Colorado also advanced this trend through HB 1222, requiring PBMs to reimburse pharmacies at amounts not less than NADAC. These developments build on momentum from 2025, when Indiana, Iowa, and Kentucky, among others, adopted NADAC-based reimbursement requirements.
Our model reimburses pharmacies at NADAC today, reflecting a longstanding commitment to transparent, acquisition cost-based pricing. By aligning reimbursement with actual drug costs and eliminating hidden spreads, Capital Rx helps drive lower overall costs while supporting predictability and accountability across the pharmacy benefit market.
We welcome these reform efforts.
All the recent health policy activity shows that we’re taking important steps toward fixing a system that's been broken for far too long. By delinking PBM compensation from drug prices and rebates, and requiring greater transparency, Congress and the administration are finally addressing the misaligned incentives that drive mistrust in our healthcare system.
The CAA 2026 codifies the transparency and pass-through, Single-Ledger Model™ we've operated under since 2018. While legacy PBMs have until 2029 to restructure, we're already there (no spread pricing, no retained rebates, and full visibility into pricing and compensation). This legislation validates our approach and helps shift power back to plan fiduciaries, who, in our opinion, stand to benefit from improved fee transparency and data access.
That approach directly reflects why we built Judi®: to replace opaque, rebate-driven models with a flat-fee, transparent infrastructure that gives plan sponsors control and visibility across pharmacy and medical benefits. Employers and plans want more integrity from their PBMs, and this is a major tailwind that has helped transparent PBMs like Capital Rx land a vast majority of our new business from traditional PBMs.
What more must be done?
The PBM legislation passed by Congress is a major step forward, but to truly fix the systemic misalignments in pharmacy benefits and drug costs, we need to go beyond legislation and effectively transform how health benefits are administered, including medical, dental, and vision. Creating a single platform that unifies these processes into one scalable solution and adopts transparent initiatives like charging a flat administrative fee so payers and employers can see the cost of the drugs they're paying for is an essential next step to address the foundational infrastructure issues of the U.S. healthcare system.
Beyond structural reform, the legislation still permits PBMs to use opaque pricing benchmarks like AWP and WAC, which can obscure true drug costs. A shift to acquisition cost- or NADAC-based reimbursement more broadly would bring greater accuracy and consistency across the supply chain.
The legislation also doesn't address specialty pharmacy steering or the vertical integration that allows PBM-owned pharmacies to capture high-margin drugs, and medical pharmacy and medical benefits should not be left out of the scope of the DOL’s new rules.
Greater transparency into affiliate pharmacy pricing and utilization is a great start, but structural separation may ultimately be needed.
Want to learn more about our aligned and transparent approaches to pharmacy and medical benefit administration? Get in touch with our team today or subscribe to our monthly newsletter to never miss an update!
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