Landmark Legislation Empowers CMS to Tackle Rising Prescription Drug Costs Through PBM Oversight
A new law, the Consolidated Appropriations Act of 2026, marks a significant shift in the government’s approach to regulating pharmacy benefit managers (PBMs) and lowering prescription drug prices, particularly within Medicare Part D. The legislation, addressing long-standing concerns from consumers and pharmacies, grants the Centers for Medicare & Medicaid Services (CMS) unprecedented authority to enforce fair practices and increase transparency in the complex world of drug pricing.
A New Era of Government Oversight in Drug Pricing
For years, policymakers on both sides of the aisle have sought solutions to address the escalating cost of prescription drugs. According to a recent interview with Jesse Dresser, Esq., partner in Frier Levitt’s Life Sciences Department, the new law represents a crucial first step. “One of the things that the government is going to be involved in is that they’re going to get tremendous amounts of data and reporting from PBMs, from plan sponsors, and from PBM-affiliated pharmacies,” Dresser explained, “where they’ll have a much better ability to do a comprehensive analysis of what the economics are in the Part D landscape.”
This influx of data will allow for a level of scrutiny previously unavailable, enabling a more informed understanding of the financial dynamics within Medicare Part D. However, the most significant change lies in CMS’s evolving role. The agency is transitioning from a passive observer to an active “enforcer,” equipped with the power to investigate complaints and impose penalties on PBMs and Part D sponsors who violate established rules.
Protecting Pharmacies from PBM Abuses
The legislation includes key protections for network pharmacies, preventing PBMs from retaliating against them for reporting concerns to CMS or for filing complaints. Furthermore, PBMs are prohibited from coercing pharmacies into accepting unreasonable or irrelevant terms and conditions. As Dresser noted, this is a “big protection for network pharmacies.”
Importantly, the law clarifies that existing rights available to pharmacies under both state and federal law – including the Any Willing Provider law – remain fully intact. “If you’re a pharmacy and you are facing unreasonable terms and conditions, you can complain to CMS,” Dresser stated, “but now the law explicitly states that nothing in the law will diminish or stand in the way of any rights that were available to pharmacies under the law or under contract.” This dual pathway for recourse provides pharmacies with multiple avenues for addressing unfair practices.
A Phased Implementation and Potential Challenges
While the new law is a landmark achievement, its impact will not be immediate. The provisions are scheduled to take effect in 2028 and will be phased in over time. Dresser cautioned that a significant hurdle lies in overcoming decades of administrative inertia within CMS. “It’s like turning around the Titanic,” he said. “It’s going to be a bit of a process to retrain thinking here and retrain the doctrine of what they are empowered to do and expected to do.”
A learning curve is also anticipated as pharmacies, PBMs, and health plans adjust to new compensation frameworks and reporting requirements. “It’s important for pharmacy providers not to expect this to be an overnight fix for PBMs and for Part D plan sponsors,” Dresser emphasized.
A First Step Towards Comprehensive PBM Reform
The law is expected to address issues such as underwater reimbursement, unreasonable terms and conditions, unfair performance metrics, and unfair auditing practices within Part D networks. However, a critical limitation is its scope. While it includes provisions for transparency regarding rebates in the commercial market, it does not extend the same protections to pharmacies operating within commercial health plans.
“While you’re getting a lot more protection in Medicare, you’re still really not addressing anything as it relates to pharmacies submitting claims in the commercial context,” Dresser pointed out. Despite this limitation, the legislation is widely viewed as a significant victory. “I do think this is a great first step,” Dresser concluded. “I think it’s amazing that Congress has gotten together on a bipartisan measure and said, ‘We’ve got to do something about these PBMs. We’ve got to do it now.’” The work, however, is far from over, and further legislative action will likely be needed to fully address the challenges presented by PBMs across all sectors of the healthcare system.
