The U.S. health insurance market has consolidated substantially, and each of the three large pharmacy benefit managers (PBMs) — that together control 75% of the market — is integrated with a large medical insurer. Recent government actions reflect concerns with how these big PBMs conduct their business and closer scrutiny of their parent companies. Here’s an overview of these recent government and legislative actions and the potential implications for drug pricing and plan sponsors.
On February 4, 2026, the Federal Trade Commission (FTC) announced a proposed settlement with Cigna and its subsidiary Express Scripts (ESI), related to insulin pricing practices. The FTC’s lawsuit against ESI alleges that “ESI artificially inflated the list price of insulin drugs by using anticompetitive and unfair rebating practices,” causing patients to pay higher out of pocket costs for those drugs. Under the proposed consent order, ESI will commit to expanding access to lower wholesale acquisition cost (i.e., list price) drug options and to strengthening rebate-free or pass-through-style offerings. ESI also agreed to “provide covered access to TrumpRx as part of its standard offering upon relevant legal and regulatory changes.” While ESI’s insulin pricing has been a focal point for this settlement, the implications extend broadly across drug pricing and other PBM practices.
On February 10, 2026, Senators Elizabeth Warren and Josh Hawley introduced the Break Up Big Medicine Act. It targets vertically integrated health insurers that own PBMs, mail and specialty pharmacies and medical provider groups. The bill aims to reduce conflicts of interest and promote competition by laying out clear rules against ownership structures that control multiple points in the healthcare delivery and payment/reimbursement chain. The proposal reflects growing concerns that these health care conglomerates contribute to higher prices for drugs and health care overall.
The Department of Labor (DOL) proposed a rule at the end of January 2026 that would require PBMs to disclose fee information to employers of self-insured plans. This includes rebates and other payments from drug manufacturers, prices paid by plan sponsors to the PBM that are higher than the amount reimbursed to the pharmacy, as well as any payments recouped from pharmacies with prescription drugs dispensed to the plan. These additional fee disclosure requirements are intended to allow you to assess the reasonableness of the fees charged by PBMs. They also signal an escalated push by the federal government for PBM transparency. The fee disclosure requirements in the DOL regulations are proposed to be effective for plan years beginning on or after July 1, 2026.
Congress passed the Consolidated Appropriations Act, 2026 (CAA) in February 2026, which applies to both fully-insured and self-insured group health plans and includes additional disclosure requirements than the DOL proposed regulations. In addition, the CAA requires 100% pass-through of rebates, and expands the entities, which would be subject to the existing broker and consultant disclosure requirements. The CAA provisions will go into effect in August, 2028 (and would apply as of January 1, 2029 for calendar year plans).
For PBMs, the most direct result from the FTC/ESI settlement is the addition of low-list-price drugs on the standard formularies to drive utilization of low-net-cost drugs. PBMs are also rolling out alternative pricing models such as rebate-free pricing models to lower members’ out of pocket cost. The Break Up Big Medicine Act, if passed, would force the big three PBMs to be divested from their parent companies. Although, the detailed impact and timing is to be determined. Lastly, additional transparency and disclosure rules would shed more light on hidden PBM revenue but may add to PBM overhead.
For employers as plan sponsors, these government and legislative actions may lead to lower net costs for drugs and are likely to lead to a decrease in rebates. Additionally, federal actions aimed at greater transparency will offer plan sponsors more negotiating leverage with PBMs. Plan sponsors will need improved procurement and modeling expertise to evaluate and compare traditional drug pricing models with alternative pricing models. Transitioning to alternative pricing arrangements may introduce member disruptions and other administrative challenges.
There are also ERISA fiduciary implications for employers because of these developments. You will want to ensure that PBM fees are reasonable, address potential contractual issues and conduct audits to ensure the information provided is accurate.
Our pharmacy practice offers deep expertise and a comprehensive suite of pharmacy consulting solutions. Our pharmacy staff work diligently to stay up to date with the vendor landscape, including innovative, emerging vendors focusing on transparency and fiduciary responsibilities. Our pricing model (RxGenesis) is the pioneer in the market and offers a robust way to compare traditional PBM deals with alternative PBM pricing models. We help plan sponsors more effectively navigate the rapidly changing legislative environment, evaluate pharmacy proposals and optimize strategy to achieve long term sustainable outcomes.
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