How new PBM transparency rules will alter drug pricing

New legislation in the United States will bring more transparency into pharmacy benefit managers’ (PBMs) business practices and likely disrupt existing drug pricing and contracting models.

The Consolidated Appropriations Act of 2026 requires PBMs to pass through 100% of rebates and discounts to health plan sponsors or insurers and provide health plans with detailed reports on drug pricing and compensation. This change is a significant departure from the status quo.

According to the Health Industries Research Center, PBM executives reported that pricing and transparency models and government regulations are the most disruptive market trends in 2026. The research also found these organisations are shifting towards alternative revenue streams and tightening formulary and utilisation controls.

The complex drug pricing ecosystem means all stakeholders are scrambling to understand how the new regulations and PBMs’ adjustments will impact their businesses. The fallout will reshape relationships between everyone involved.

Transparency disrupts the traditional drug pricing process

Historically, manufacturers offer rebates and discounts on drug list prices to PBMs to receive preferred formulary placement. The PBMs keep a percentage of the savings and pass the rest downstream to payers and, theoretically, patients.

The model creates incentives for intermediaries to favour brand-name drugs over generics because they collect higher rebates. Drug price negotiations are not publicly released, so we don’t know the final price tag or savings distribution. This opacity is what prompted the transparency legislation.

PBMs’ efforts to maintain revenue under the new regulations will ripple through the entire supply chain. Since these organisations must pass all of the savings to plan sponsors and disclose pricing, many are introducing administrative fees to maintain revenue. These costs are layered on top of standard rebate structures.

PBMs are legally supposed to structure these fees based on the fair market value of the management services they provide. My company has seen those charges ranging from $10 to $115, depending on the medication.

Impact on pharmaceutical manufacturers

Model N research found 61% of surveyed life sciences leaders say PBMs are the leading contributor to the increasing complexity of gross-to-net management. These new expenses create additional financial exposure for pharmaceutical manufacturers.

When a fee is tacked onto every prescription filled, it imposes an immediate operational penalty. This arrangement can shrink margins enough that selling the drug no longer makes financial sense.

While adjusting list prices to compensate is an option, manufacturers must consider the consequences. Changes could trigger inflation penalties, impact government pricing, increase patient coinsurance and damage the company’s public perception.

Some of our clients are asking us how to negotiate PBM payment terms in light of the new fee structure. Common questions include: How do we define fair market value? What additional services justify the extra cost? Should we adjust our discounts down in response?

We could see some manufacturers refusing to offer high rebates and instead accepting non-preferred formulary placements. The savings could then be applied to highly competitive copay card and discount programmes, including direct-to-consumer channels. This strategy offsets the out-of-pocket costs without eliminating margins.

A D2 survey found these options are underused by consumers. The data showed 46% of survey respondents are unaware of manufacturer support programmes, and only 15% are currently using them, presenting an opportunity for manufacturers to establish alternative patient support options.

Some companies are already contracting directly with health plans to give discounts without paying fees to an intermediary. Digital access platforms are another channel to streamline prescription delivery. These entities enable prior authorisation, claims processing, pharmacy fulfilment, clinical reimbursement support, and patient cost assistance. Manufacturers pay a flat service fee, rather than rebates calculated on sales volume.

Impact on payers

Downstream, payers may face net losses even though they receive 100% of discounts. In some cases, the upfront administrative fees could exceed the extra savings.

Additionally, manufacturer rebates are based on volume and remitted to the payer months later. The time gap between payments to PBMs and reimbursement forces plans to float more capital up front, which they may not recoup if they don’t meet sales goals.

Health plans and employers could face the tough choice of passing costs to patients or restricting their drug coverage.

However, the new requirements will give payers more power over their relationships. PBMs will be forced to demonstrate their value in hard numbers, or plan sponsors will pick another vendor.

Impact on pharmacies

The impact on pharmacies will be mixed. The new transparency requirements will create more predictable reimbursement rates. PBMs won’t be able to engage in spread pricing — where they bill the health plan a higher rate than they pay the pharmacy — or enact retroactive fees. Moving payments up front allows retail pharmacies to see their margin at the point of sale.

However, PBMs will keep the upper hand when negotiating pharmacy network contracts, especially with independent pharmacies. The Drug Channels Institute reported that three companies processed 80% of all 2025 equivalent prescription claims. Major PBMs also own their own mail-order, retail, or specialty pharmacies. This setup means independent operations lack bargaining power and may be forced to accept low-margin contracts.

In some cases, PBMs are compressing baseline dispensing rates to offset rebate losses. Maximum Allowable Cost (MAC) limits are frequently set below what an independent pharmacy pays wholesale to acquire a drug, forcing pharmacies to sell medications at a net loss.

While Congress is considering legislation to ban PBMs from owning retail stores, they have not enacted any laws yet, meaning smaller pharmacies will continue to feel the financial pressure.

Visibility is good, but not a final solution

Visibility alone is not the solution to fixing the drug pricing system. While PBM pricing transparency is a positive development, success depends on how stakeholders adjust.

What we do know is that manufacturers and payers alike must scrutinise their PBM contracts and weigh alternative options. PBMs must ensure their operations deliver value, not just profit. Hopefully, the adjustments will align incentives so patients receive the benefits.

About the author

Jerry Smith is executive vice president at D2 Solutions, where he helps advance technology and services that improve patient access, reimbursement, and medication support. He brings more than two decades of healthcare and life sciences experience, including leadership roles with ProCare Rx, Caremark, Wolters Kluwer Health, and Wyeth.