Congress Just Drew a Line on PBM Compensation

Recently, President Trump signed the Consolidated Appropriations Act of 2026, avoiding a government shutdown and setting federal funding for the year. Included inside the bill is a major policy change that will reshape how Pharmacy Benefit Managers (PBMs) operate, specifically for payments related to Medicare Part D.

Historically, lawmakers have focused on drug manufacturers when talking about high drug costs. That focus is shifting and Congress is now targeting PBMs and how they make money. Section 6224 of the Act, called “Modernizing and Ensuring PBM Accountability,” sends a clear message: PBM compensation needs to be simpler, more transparent, and more directly tied to actual services.

These changes don’t take effect immediately, but they set the direction for the market.

Why PBMs Are Under the Microscope

PBMs sit in the middle of the drug supply chain. They negotiate prices and rebates with manufacturers, manage formularies, and reimburse pharmacies. Because of that position, the way PBMs are paid can influence which drugs are covered, how much patients pay, and where discounts ultimately land.

Lawmakers have grown increasingly concerned that complex PBM payment structures, especially those tied to drug prices or rebate size, may reward higher prices rather than lower costs. This law is Congress’s most direct attempt yet to change that dynamic.

When the Rules Change

The new requirements take effect on January 1, 2028. That gives PBMs, manufacturers, and health plans time to adjust contracts and business models, but the end state is now clearly defined.

The Core Change: How PBMs Get Paid

Under the new law, PBMs working with Medicare Part D drugs can only be paid through bona fide service fees. In plain terms, that means PBMs can only earn money for real, identifiable services they actually perform.

This effectively eliminates common revenue sources such as:

• Fees calculated as a percentage of a drug’s price
• Spread pricing models (charging more to a plan than they pay to the pharmacy)
• Keeping any portion of manufacturer rebates

If a payment is not a legitimate service fee, it is no longer allowed for Part D drugs.

Flat Fees, Not Percentages

The law also spells out what counts as an acceptable service fee. To qualify, fees must:

• Be a flat dollar amount
• Meet the other Bona Fide Service Fee Requirements, including reflecting fair market value for the service provided
• Not increase when drug prices or rebate amounts increase

This is a significant and meaningful shift. Many existing PBM contracts rely on percentage-based fees, which automatically grow as drug prices rise. Congress is explicitly rejecting that model.

Rebates Must Flow Through

Just as significant, the law makes clear that PBMs can no longer keep manufacturer rebates for Part D drugs. Since PBMs are only allowed to receive service fees, any rebates or discounts negotiated with manufacturers must be passed along.

The intent is straightforward: drug discounts should benefit pharmacies and patients, not serve as PBM revenue.

New Transparency Requirements

Beyond payment reform, the law also requires PBMs to provide more detailed reporting on Part D drugs, including information on pricing and fees.

The first set of reports is due on July 1, 2028. While regulators will still need to define the exact format, Congress’s goal is clear; create greater visibility into how money moves through the drug supply chain.

What’s Still Unclear

At this point, it’s not certain whether these rules will eventually apply to other government programs, such as Medicaid. That said, Medicare policies often influence broader market behavior, even when they don’t formally apply elsewhere.

What This Means for Businesses

• PBMs will likely need to adjust their revenue models and move away from models built on rebates and percentage-based fees under the new rules.
• Drug manufacturers may see simpler rebate structures but will face more scrutiny and regulation around how PBM service fees are defined, justified and treated.
• Pharmacies and patients are intended beneficiaries, as more negotiated discounts should flow through instead of being retained by intermediaries.

Bottom Line

Section 6224 of the Consolidated Appropriations Act of 2026 is one of the most direct attempts we have seen to reset PBM economics. By limiting PBM compensation to flat service fees and requiring greater transparency, Congress is pushing the system toward fewer hidden incentives and clearer pricing.

While details will continue to emerge through regulatory guidance, the direction is unmistakable: by 2028, PBM contracting for Medicare Part D will look very different than it does today.

PBM reform will change how drug discounts flow through the system. For manufacturers, that means potential implications for Medicare, Medicaid, VA, and other government pricing calculations.

We help manufacturers get ahead of regulatory change, Modeling impact, reducing risk, and ensuring compliant government reporting. If you’re thinking about how these PBM changes could affect your pricing data, now is the time to engage.