Yesterday, the U.S. House of Representatives passed the Consolidated Appropriations Act, 2026, government-funding legislation that contains the most substantial federal action ever related to pharmacy benefit manager (PBM) reform. Specifically, it includes essential reforms in Medicare that have stood among the priority provisions sought by NACDS and by pharmacy allies, speaking with one voice.
Recently – and especially over the past two years – Congress has come close to enacting reforms, only to have near-wins disrupted due to political factors beyond the issue of PBM reform itself. Now, as Congress works against a January 30 government-funding deadline, PBM reform, and the Americans and pharmacies counting on it, has another prime opportunity for enactment. The bill is slated for Senate action next week, and passage in that legislative chamber would send the legislation to President Trump for consideration and signature.
Advocacy in Action
I want to recognize the strong advocacy of the NACDS membership which has – once again – led PBM reform to this point. It remains essential to use the NACDS RxIMPACT Action Alert to urge Senate passage. Please write to your Senators today.
In addition, thank you to NACDS member representatives who reached out to specific members of Congress with targeted and timely advocacy during the House’s consideration of the bill. This outreach was highly effective and integral to success thus far.
Please see several other resources and examples of advocacy that may be of interest to you:
Press Release: NACDS “Key-Votes” the Appropriations Bill
Pharmacy Coalition Statement
Pharmacy Coalition Letter
NACDS TV and Digital Ads
Americans’ Concerns about Pharmacy Closures: Polling and Video
NACDS Letter to Congressional Leadership
About the Reforms
A key to effective advocacy is the fact that NACDS and pharmacy allies have spoken with one voice in prioritizing specific reforms. The legislation that now is close to becoming law includes the pharmacy community’s priority Medicare reforms, as well as additional measures. The legislation does not include Medicaid reforms advocated by NACDS and our allies, apparently due to changes in evaluations of those reforms by the Congressional Budget Office that – while questionable – could not be resolved by the House and Senate as they faced the January 30 government-funding deadline. Members of Congress have pledged to confront this issue, as part of their continued work on PBM reform.
The Medicare reforms would be nothing short of historic, and truly essential given that Medicare is in the jurisdiction of the federal government and thus reliant on federal action for necessary improvements.
Importantly, pharmacy-priority Medicare reforms have been designed specifically by Congress to have the capability to address always-evolving tactics of PBMs. That is, the reforms create mechanisms that can “have teeth” even as the PBMs morph their practices.
The current legislation includes the following Medicare reforms:
- This bill includes provisions affecting PBM practices in the Medicare Part D program by modifying pharmacy network participation requirements, establishing standards for pharmacy contract terms, and regulating PBM compensation and financial transparency. Sections 6223 and 6224 apply exclusively to Medicare prescription drug plans and Medicare Advantage prescription drug plans.
- Section 6223, titled “Assuring Pharmacy Access and Choice for Medicare Beneficiaries,” requires Medicare Part D plan sponsors to permit any pharmacy willing to accept standard contract terms and conditions to participate in a plan’s pharmacy network. The section applies this requirement to prescription drug plans and Medicare Advantage prescription drug plans.
- Section 6223 further requires that pharmacy contract terms and conditions be reasonable and relevant to the provision of pharmacy services. It directs the Secretary of Health and Human Services to establish standards defining reasonable and relevant contract terms, informed by stakeholder input. These standards may address areas including reimbursement methodologies, dispensing fees, audit practices, performance measures, and network participation requirements.
- Section 6223 establishes a process for pharmacies to submit complaints to the Centers for Medicare & Medicaid Services (CMS) when a plan sponsor or PBM is alleged to be using contract terms that do not comply with the reasonable-and-relevant standards. The section requires CMS to develop a standardized complaint submission process, maintain the confidentiality of submissions, and prohibit retaliation or coercion related to complaint submission. CMS is authorized to review complaints and take enforcement action where appropriate. The section also authorizes CMS to impose civil monetary penalties or other intermediate sanctions on Part D plan sponsors that fail to comply with these requirements.
- Section 6224, titled “Modernizing and Ensuring PBM Accountability,” includes provisions governing PBM compensation and financial arrangements within Medicare Part D. The section requires PBMs to pass through to Medicare Part D plan sponsors all rebates, discounts, and other price concessions received in connection with covered prescription drugs and prohibits PBMs from retaining such amounts.
- Section 6224 permits PBMs to receive bona fide service fees in the form of clearly defined administrative fees paid by plan sponsors, provided those fees reflect legitimate services performed and are not tied to drug list prices, rebates, or other drug-based remuneration. The section prohibits PBMs from retaining drug-related remuneration by recharacterizing such amounts as service or administrative fees.
- Section 6224 also establishes expanded transparency, disclosure, and audit requirements. PBMs must disclose to plan sponsors and the Secretary detailed information regarding rebates, discounts, net drug prices, administrative and service fees, and other compensation, including information necessary to distinguish bona fide service fees from prohibited retained remuneration. The section authorizes audits and enforcement actions, including recovery of improperly retained amounts, for failure to comply with pass-through, disclosure, or compensation requirements.
- CMS is required to publish a biennial report on enforcement and oversight activities related to pharmacy access and PBM accountability, and the bill appropriates $188 million to CMS for program management, oversight, and enforcement.
- Implementation occurs on a phased schedule. For Section 6223, the Secretary must solicit stakeholder input on pharmacy contract standards by April 1, 2027, finalize standards by the first Monday in April 2028, and apply the requirements to Medicare Part D plan years beginning on or after January 1, 2029. CMS must begin publishing biennial enforcement and oversight reports no later than July 1, 2029. The PBM compensation, pass-through, transparency, and bona fide service fee requirements in Section 6224 apply on the same Medicare Part D implementation timeline.
The legislation also includes the following commercial-market reforms:
- Section 6701 adds new federal oversight requirements for pharmacy benefit managers that provide pharmacy benefit management services to group health plans and health insurance issuers in the commercial market, including routine transparency reporting (at least semi-annually, or quarterly if requested) with drug- and payment-level information and restrictions on contract terms that would impede a plan’s access to the information needed to perform oversight.
- Section 6702 establishes that a PBM’s compensation arrangement is treated as unreasonable unless the PBM remits 100% of rebates, fees, discounts, and other remuneration tied to drug utilization or plan spending to the group health plan (or to the issuer on the plan’s behalf), generally on a quarterly schedule, and it also includes disclosure and audit rights and an “innocent plan fiduciary” protection framework when a PBM fails to remit amounts and the fiduciary takes specified corrective actions.
- The commercial market/ERISA PBM reforms in Sections 6701 and 6702 generally take effect for plan years beginning on or after 30 months after enactment.
For more information about the policies contained in this legislation, please contact Christie Boutte, NACDS’ senior vice president of reimbursement, innovation and advocacy. To discuss advocacy and political dynamics, please contact Chris Krese, NACDS’ senior vice president of Congressional relations and communications.
Thank you for your engagement in NACDS, which makes possible the Association’s work as a force multiplier to advance issues of vital importance for all Americans and for their trusted pharmacies. On to the Senate for must-have PBM reform!
