With the conclusion of the first quarter of 2026, transparency and affordability continue to dominate the conversation around pharmacy benefits regulation. Federal and state lawmakers are keeping a close watch on pharmacy benefits managers (PBMs). Their primary objective is straightforward: rein in rising prescription drug costs and require clearer PBM disclosures across the board.
For sponsors of self-funded plans, understanding each changing regulatory requirement is critical to maintaining compliance and safeguarding plan interests. In addition to significant federal actions – including landmark Federal Trade Commission (FTC) settlements, the Consolidated Appropriations Act of 2026 (CAA 2026), and new Department of Labor (DOL) proposed rulemaking – state regulators remain highly active, introducing numerous bills aimed at shaping PBM operations.
These developments collectively signal substantial changes ahead for pharmacy benefits strategies for self-funded employers.
Federal landscape: the push for transparency
Federal scrutiny of PBMs has materialized through executive action, regulatory rulemaking, and new legislation. A concerted effort is underway to mandate a 100% rebate pass-through model and eliminate opaque pricing practices.
FTC action and the Express Scripts settlement
The FTC recently announced a major settlement with Express Scripts, Inc. (ESI) stemming from its enforcement action over insulin pricing. Under the agreement, ESI must fundamentally overhaul its business practices by developing a “standard offering” for all clients by 2027.
Key provisions of this standard offering include:
- Member cost protections: Member out-of-pocket costs cannot exceed the drug’s net cost and cannot be based on the list price.
- Rebate pass-through: Members must receive the benefit of any manufacturer rebate directly at the point of sale.
- Pricing transparency: ESI cannot utilize spread pricing or base its compensation on a drug’s list price.
- Retail pharmacy fair contracting: Pharmacies must be compensated based on the actual cost of the drug plus a dispensing fee, effectively establishing a National Average Drug Acquisition Cost (NADAC) model.
Plan sponsors can still request non-standard offerings, but this settlement signals a clear federal preference for transparent, pass-through models.
Although the details have not been made public yet, CVS Caremark announced that it too has reached a settlement with the FTC. Industry watchers expect Optum Rx to enter a similar agreement with the FTC soon.
CAA 2026
President Trump signed the CAA 2026 into law early in February, establishing significant new compliance obligations for group health plans. For the pharmacy benefits industry, this legislation puts a definitive timeline on the transition to a transparent rebate model.
Rebate pass-through: For plan years beginning on or after August 3, 2028 (or January 1, 2029, for calendar-year plans), PBMs must remit 100% of rebates, fees, alternative discounts, and other remuneration to the plan sponsor. The law also grants plans the right to audit their PBM once per year using an auditor of their choice.
Service fees: Notably, the CAA 2026 includes an exception for “bona fide service fees.” These fair-market-value payments for bona fide services do not have to be passed through to clients, provided they are transparent and quantifiable.
Reporting: For plan years beginning on or after August 3, 2028 (or January 1, 2029, for calendar-year plans) PBMs must submit detailed, semiannual reports in a machine-readable file format to large employers and plans (100 or more employees or participants) with pharmacy spend by drug, pharmacy spend by therapeutic class, information on the top 50 drugs with the highest spend, and affiliate pharmacy utilization data. This information must also be made available in a summary document to non-large employers and plans. Finally, a summary document must be made available to participants and beneficiaries related the plan’s pharmacy spend, rebates and discounts received, affiliate pharmacy utilization, and compensation amounts paid to PBM service providers and referral sources.
DOL proposed rule on PBM compensation
Just before the enactment of the CAA 2026, the DOL released a proposed rule requiring extensive compensation disclosures from PBM service providers to self-funded ERISA clients.
This rule targets an aggressive effective date for plan years beginning on or after July 1, 2026. It requires PBMs to provide initial estimates of their compensation 30 days before entering or renewing a contract, followed by semiannual disclosures of actual compensation amounts.
Industry advocates, including the Pharmaceutical Care Management Association (PCMA), are expected to push back on this timeline. They will likely point out that the proposed rule should be harmonized with the newly passed CAA 2026, which provides a more reasonable implementation runway through 2028.
The launch of TrumpRx
The White House officially launched TrumpRx.gov in early February. The platform aims to provide cash-paying patients with access to discounted brand-name prescription drugs, including high-demand GLP-1 medications. The new platform is a follow-on to the Trump administrations push for Most-Favored-Nation pricing and the deals struck with leading pharmaceutical manufacturers following last year’s flurry of executive orders on drug pricing.
For now, it is important to note that the platform operates entirely outside the insurance ecosystem. However, there is potential for change on that front. For example, the FTC-ESI settlement requires ESI to integrate TrumpRx into its standard offering, contingent on future regulatory changes. The potential integration of direct-to-consumer initiatives like this into commercial benefits strategies remains under observation.
Tariffs
In April, the White House announced an updated plan for tariffs on imported pharmaceutical products. The default tariff for patented pharmaceuticals and associated products will be 100% unless a lower rate applies. The announcement lists multiple categories that qualify for lower rates:
- Companies that have approved plans to onshore production (20% until 2030)
- Products of Japan, the European Union (EU), Korea, Switzerland and Lichtenstein (15%) and the UK (10%)
- Orphan drugs, nuclear medicines, plasma derived therapies, fertility treatments, cell and gene therapies, antibody drug conjugates, drugs treating nuclear and other attacks, and other specialty drugs to be specified by the U.S. Department of Health and Human Services (HHS) (0%)
- Companies that have entered into “Most Favored Nation” (MFN) pricing agreements with HHS (0% until 2029)
- Generic pharmaceuticals and associated ingredients (0%)
- Imports of U.S.-origin pharmaceutical products (0%)
The new tariffs become effective July 31 for certain companies specified in an annex to the White House announcement. For other companies, the tariffs go into effect on September 29.
State-level regulatory updates
State legislatures are currently in full swing, with more than 1,300 pharmacy benefit bills already actively tracked for 2026. While 500+ of these bills are carryovers from the highly active 2025 sessions, state lawmakers show no signs of slowing down their focus on PBM reform.
Key legislative trends for 2026
State-level efforts continue to target specific PBM operational practices. The top areas of focus include:
- Utilization management: More than 280 bills seek to place tight guardrails around step therapy (ST) and prior authorization (PA) protocols. Noteworthy enacted bills: IN HB 1114 (limits ST for advanced metastatic cancer), MS HB 856 (limits ST for advanced metastatic cancer), WA SB 5395 (new PA requirements), WA SB 6183 (coverage of HIV antiviral drugs not subject to PA or ST), WV HB 4965 (limits PA for alternative treatments of the same condition).
- Cost-sharing requirements: Legislatures are aggressively pursuing copay accumulator program bans and coverage mandates. Noteworthy enacted bills: ID H 929 (certain cash-pay transactions count toward deductibles and out-of-pocket maximums), NJ A 5217 (restricting copay accumulator programs), VT H 545 (establishes universal immunization access program, zero cost sharing for recommended immunizations, funded by new surcharge to health insurers).
- Pharmacy reimbursement: Regulatory mandates are increasingly requiring PBMs to reimburse pharmacies based on NADAC plus a state-defined professional dispensing fee. Noteworthy enacted bills: LA Directive 257 (NADAC + $9 reimbursement for “local” pharmacies).
- Vertical integration: Sometimes referred to as “forced pharmacy closure bills,” lawmakers are actively debating bills designed to prevent PBMs or PBM-affiliated companies from owning or operating pharmacies. Noteworthy enacted bills: None.
The following chart outlines specific state bills to watch across several key issues. All bills listed are currently pending and have not yet been enacted, unless otherwise noted:
| State bill | Pharmacy reimbursement | Network restrictions | Spread pricing | Accumulator programs | Rebates | Vertical integration (PBM pharmacy closure) |
| Idaho | SB 1367 | SB 1367 | SB 1367 | |||
| Kansas | SB 360 | SB 360 | SB 360 | |||
| Louisiana | HB 938, HB 919 | HB 938, HB 919 | ||||
| Massachusetts | HD 1358 | HD 1358 | HD 1358 | HD 1358 | ||
| Minnesota | HF 4140 | HF 4140 | ||||
| New Jersey | SB 2345 | SB 2345 | SB 3381 | |||
| New York | A 5882 | A 6546 | ||||
| Oklahoma | H 3538 | SB 161 | SB 161 | |||
| Pennsylvania | HB 2050 | |||||
| South Carolina | SB 342 | |||||
| Tennessee | SB 2040 | |||||
| Virginia | HB 830 (enacted) |
Adjourned sessions: Several states have already adjourned their legislative sessions for the year, including Florida, Georgia, Idaho, Indiana, New Mexico, Oregon, South Dakota, Utah, Virginia, Washington, West Virginia, Wisconsin, and Wyoming. Although lawmakers introduced many bills in these states, very few critical pharmacy benefits bills have passed so far.
States without regular sessions: States that do not convene a regular legislative session this year include Montana, Nevada, North Dakota, and Texas. As a result, there are no expectations that any major legislation from these states will be introduced in 2026. However, there remains a potential for special sessions that could address healthcare matters.
ERISA preemption and California SB 41
A critical battleground for state legislation is the application of these laws to self-funded ERISA plans. Federal law traditionally preempts states from regulating self-funded plans, but states are increasingly attempting to test the boundaries of ERISA preemption.
A prime example is California SB 41, which mandates that PBMs hold fiduciary duties toward their self-funded ERISA plan clients. In January 2026, PCMA filed a legal challenge in federal court to block this provision, arguing strict ERISA preemption. The outcome of this litigation, expected later this year, will set a vital precedent regarding how far states can go in regulating the vendors that serve self-funded employers.
Actionable next steps for benefits advisors
The regulatory landscape governing pharmacy benefits is evolving at an unprecedented pace. From the FTC’s demand for standard, transparent offerings to the CAA 2026’s mandate for 100% rebate pass-through, the industry is unequivocally moving toward a model defined by clarity and financial alignment.
To protect your plan and optimize your pharmacy benefits strategy:
- Evaluate PBM readiness: Review your existing PBM arrangements to understand how they align with the upcoming CAA 2026 requirements. If you are currently on a traditional spread or rebate-retained model, begin planning your transition to a pass-through arrangement.
- Monitor state legislation: If you manage a self-funded plan, pay close attention to the ongoing ERISA preemption lawsuits. The outcome of cases like the California SB 41 challenge will dictate your future compliance obligations.
- Demand transparency now: You do not have to wait for the 2028 federal mandates to take effect. Engage with a pharmacy benefits optimizer who advocates on your behalf to secure transparent contracts, pass-through pricing, and independent clinical oversight today.
Stay tuned for Q2 2026 updates as these crucial legislative and regulatory initiatives continue to develop. You can also listen to our recent legislative webinar, “Pharmacy Benefits in Flux: A 2026 Legislative Roadmap,” to learn more.
Learn more:
Webinar: Pharmacy Benefits in Flux: A 202 Legislative Roadmap, March 26, 2026
From Transparency to Transformation: 5 Must-Know Regulatory Updates Shaping Pharmacy Benefits, Feb. 27, 2026
The Four Forces That Shape – and Reshape – Healthcare in 2026, Feb. 2, 2026
Quarterly State-Level Regulatory Update, Oct. 23, 2025
