Pharmacy benefits regulation is shifting at a record pace. Federal agencies, Congress, courts, and state legislatures are rewriting the rules on how pharmacy benefits managers (PBMs) operate and how you manage pharmacy spending for your health plan. If you sponsor self-funded coverage or advise clients, you need to track these moving pieces to avoid risk and keep your plan on strong footing.
Here’s a streamlined look at four developments making the biggest impact for employers in 2026 – and what you should do next.
1. The DOL’s PBM Transparency Rule Under Review
The Department of Labor’s (DOL’s) proposed rule, “Improving Transparency into Pharmacy Benefit Manager Fee Disclosure,” could reshape how you handle PBM contracts and reporting. The public comment period for this rule closed April 15, with over 560 comments submitted.
What issues did commenters raise? The DOL rule would require PBMs to give employer-sponsored plans detailed compensation disclosures, both upfront and at regular intervals, including drug-level information related to spread pricing, manufacturer payments, and formulary placement incentives. The disclosure requirements are accompanied by robust audit rights for plans covered by the federal Employee Retirement Income Security Act of 1974 (ERISA). While that may sound reasonable, some comments argue that the landscape shifted after Congress passed the Consolidated Appropriations Act of 2026 (CAA 2026), which already establishes federal guidelines for transparency, rebate pass-through, and audit rights.
Key issues raised in the comments:
- Accelerated timeline: The DOL rule was released on January 30 and is set to apply to plan years beginning July 1, 2026 – a compliance runway of less than six months. Others argued that this is nearly two years ahead of the CAA 2026’s main effective date.
- Extra reporting: The proposed rule requires more detail and more data than CAA 2026, which some commenters argue leads to overlapping disclosures.
- Rule is still insufficient: Some comments argued that the DOL rule does not go far enough and that more disclosures should be required for additional categories of compensation and revenue streams.
Takeaway: The DOL is currently assessing both sides of these issues and will release a final rule that is likely to contain certain modifications, or (less likely) the DOL could withdraw its proposal. In the meantime, prepare for earlier disclosure requirements and more granular reporting unless the DOL aligns with CAA 2026. Review your PBM contract language now for audit rights, rebate pass-through, and disclosure requirements. Stay alert for further DOL updates and get your data systems ready for increased transparency – so you’re not playing catch-up.
2. Tennessee SB 2040: The Next PBM Ownership Battle
Tennessee’s SB 2040, which is awaiting the governor’s signature, would ban PBMs from owning pharmacies in the state – a direct strike against vertical integration. Major PBMs are lobbying for a veto, but the bill’s broad legislative support signals a determined new front in the PBM reform fight.
Notably, the law’s effective date was pushed out to July 1, 2028. This gives other states – and courts – time to weigh in, especially because a similar law in Arkansas is tied up in constitutional litigation and could take years to resolve.
Why it matters:
- Broader trend: More states are eyeing similar measures to break up the PBM-pharmacy relationship.
- Network impact: If these laws stand, you’ll need to rethink pharmacy access, mail-order partnerships, and specialty drug delivery.
Takeaway: If your workforce or clients span multiple states, ask your PBM how they’re planning for possible ownership restrictions and resulting litigation. Legal delays don’t freeze risk; they change how networks and contracts are structured right now.
3. Sixth Circuit’s McKee Foods Decision Reinforces ERISA Preemption
In April, the Sixth Circuit’s McKee Foods decision ruled that key parts of Tennessee’s PBM law – specifically pharmacy network design – are preempted by federal Employee Retirement Income Security Act of 1974 (ERISA) requirements. This builds on recent Tenth Circuit precedent and restores much-needed certainty to employer plan sponsors.
Why this matters to you:
- Consistency: ERISA preemption means you follow one federal standard, not a patchwork of state rules.
- Cost control: You maintain authority over which pharmacies and payment models make sense for your plan.
- Litigation defense: Courts are signaling that states cannot unilaterally disrupt employer plan design.
Takeaway: Monitor ERISA preemption cases closely, especially if you manage plans across several states. This body of law protects your ability to shape network design, control costs, and avoid state-by-state administrative headaches.
4. Federal and State Trends: Transparency and Reporting Are Here to Stay
Beyond these headline issues, the regulatory push toward PBM transparency has never been stronger. Federal and state reforms are converging, and legal challenges are reshaping compliance.
Highlights:
- CAA 2026: Requires full rebate pass-through, annual audit rights, detailed (often semiannual) reporting for large employers, and summary data for smaller plans – starting with plan years on or after August 3, 2028.
- FTC settlements: The Express Scripts settlement eliminates spread pricing, requires net cost-based member payments, and boosts transparency. CVS Caremark announced a similar settlement, with Optum Rx expected to follow.
- State action: Over 1,500 pharmacy benefit bills are active in 2026, focusing on copay accumulators, pharmacy reimbursement, utilization management, and vertical integration bans.
Takeaway: Build compliance into your strategy now. Don’t wait for enforcement in 2028. Evaluate your PBM’s pricing structure, transition to pass-through models if you haven’t already, and stay on top of state and federal requirements. Legal battles may create temporary uncertainties, but the long-term trend is clear.
Next Steps for Employers and Advisors
Regulatory change is accelerating, but you don’t have to navigate it alone. To keep your plan protected and competitive:
- Review PBM contracts for needed updates and rights.
- Get ready for CAA 2026’s reporting and rebate standards.
- Track both state and federal law – and the litigation that follows.
- Assess network strategy for compliance and cost control.
- Ask transparent, client-focused questions of PBM partners.
Taking these practical steps today puts you in control – positioned to manage risk, maximize value, and stay ahead in a complex, evolving market.
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:
Preparing for 2028: The New ERISA Rebate Pass-Through Mandate, April 28, 2026
Decoding PBM Reform Legislation: Essential Q1 2026 2026 Insights for Self-Funded Plan Sponsors, April 15, 2026
From Transparency to Transformation: 5 Must-Know Regulatory Updates Shaping Pharmacy Benefits, Feb. 27, 2026
