While the reforms Congress wanted targeting pharmacy benefit managers (PBMs) didn’t make the Continuing Resolution passed in late December 2024, legislative initiatives are still underway to enhance transparency and accountability in the pharmaceutical supply chain.
Federal Legislative Efforts
The 2025 Reconciliation Bill, currently under Senate consideration, includes provisions aimed at reforming PBM practices within Medicare and Medicaid. These measures seek to prohibit spread pricing and transition PBM compensation to flat fees, particularly in Medicare Part D. However, analysts suggest that these reforms may have limited impact on current PBM operations.
Additionally, the bipartisan Pharmacy Benefit Manager Transparency Act of 2025, introduced by Senators Chuck Grassley (R-Iowa) and Maria Cantwell (D-Wash.), aims to eliminate opaque pricing practices and require PBMs to disclose rebate and pricing information.
State-Level Initiatives and Legal Challenges
States are also taking significant steps to regulate PBMs. Arkansas recently enacted a law prohibiting PBMs from owning pharmacies, a move designed to reduce conflicts of interest and promote fair competition. Major PBMs, including CVS Caremark and Express Scripts, have filed lawsuits challenging the law’s constitutionality, arguing it could disrupt patient access to medications.
Other states, such as Massachusetts, have passed legislation requiring PBMs to obtain licenses and report rebate data, reflecting a growing trend of state-level oversight.
Implications for Hospital and Health System Leaders
Hospital and health system leaders should consider the following actions:
- Monitor Legislative Developments: Stay informed about federal and state legislative activities concerning PBM reform, as changes may impact drug procurement strategies and reimbursement models.
- Engage in Advocacy: Collaborate with professional associations to advocate for policies that promote transparency and equitable practices in the pharmaceutical supply chain.
- Assess Contractual Relationships: Review existing contracts with PBMs to identify potential areas of concern, such as spread pricing or rebate structures, and explore opportunities for renegotiation in light of emerging regulations.
- Prepare for Operational Adjustments: Anticipate changes in drug pricing and reimbursement processes that may result from legislative reforms, and develop strategies to adapt to new regulatory environments.
As the landscape of PBM regulation evolves, proactive engagement and strategic planning will be essential for hospital and health system leaders to navigate the complexities of pharmaceutical management effectively.
