Pharmacy benefit managers (PBMs) are under unprecedented scrutiny. Federal regulators, lawmakers, and the White House are all pushing for more transparency and accountability. For health systems, these developments have serious operational and financial implications.
What’s Changing
- Federal Trade Commission Investigations
The FTC has filed actions against the three largest PBMs—CVS Caremark, Express Scripts, and OptumRx—alleging anti-competitive practices and price inflation, especially around insulin. These cases challenge the foundation of the current PBM model and may lead to structural reforms. - Executive Action from the White House: On April 22, 2025, President Trump signed an executive order targeting PBM practices. It instructs the Department of Labor to propose rules enhancing transparency around PBM compensation in employer health plans. It also directs the Department of Health and Human Services to issue recommendations to reduce anti-competitive behavior across the drug supply chain.
- Legislative Momentum: Congress is considering policies that would require PBMs to pass rebates directly to health plans, limit their ability to own or prioritize certain pharmacies, and increase regulatory oversight.
What This Means for Health Systems
- Greater Pricing Transparency: Health systems managing their own employee health plans may soon have better visibility into PBM contracts, rebate flows, and actual drug costs. This transparency could significantly reduce unnecessary spending, enhance forecasting accuracy, and unlock substantial savings across pharmacy benefit budgets.
- Pharmacy Strategy Shifts: If regulators limit PBMs from favoring affiliated pharmacies, hospital-owned or independent pharmacy models could become more competitive. Health systems could capture a larger share of pharmacy revenue, improve margin contributions, and better control drug pricing at the point of care.
- Contract Adjustments: New regulations could prompt health systems to revisit existing PBM agreements. Renegotiated contracts could eliminate hidden fees and clawbacks, directly improving the system’s financial performance while reducing compliance risk exposure tied to opaque rebate arrangements.
- Interest in Alternative PBMs: As traditional PBMs face regulatory pressure, interest is growing in pass-through or transparent PBM models. Adopting these models could deliver measurable cost savings by eliminating spread pricing and aligning incentives, ultimately preserving cash flow and driving down total healthcare spend.
- Better Patient Access and Adherence: If reforms successfully shift savings to patients, health systems could see improved medication adherence and clinical outcomes. Lower out-of-pocket costs could also reduce charity care burdens, bad debt, and uncompensated care expenses, while improving overall population health management ROI.
Moving Forward
Health systems cannot afford to treat PBM reform as a back-office issue. Pharmacy operations, finance, compliance, and care teams all have a stake in what comes next. These reforms represent both a challenge and an opportunity to reimagine how pharmacy benefits are managed and delivered.
The regulatory landscape is changing. Health systems must stay informed and proactive will be best positioned to adapt, advocate, and lead in this new environment.
