Monthly PBM Reform Report – May 2026

Monthly Legislative & Lobbying Activity Report for May 2026

Legislative Activity

 

PBM Legislation Advances in House

 

In May, lawmakers continued to advance targeted PBM and health care transparency legislation, with activity focused on PBM compensation practices, vertically integrated ownership models, and broader price transparency in the employer-sponsored insurance market. While the month did not produce  an opportunity for a comprehensive PBM reform vehicle, the legislative activity underscored continued bipartisan interest in addressing conflicts of interest, market consolidation, and opaque pricing arrangements across the prescription drug supply chain.

 

 

During committee consideration, Rep. Mark DeSaulnier (D-CA) offered an amendment that would have broadened the bill by striking language limiting the prohibition to PBM services. The amendment failed by a vote of 15-19. However, even without the amendment, the bill’s unanimous committee passage reflects continued bipartisan concern regarding PBM compensation arrangements and consultant conflicts of interest.

 

Additional PBM Legislation Introduced

 

 

Among other things, the bill would require PBMs and insurers to divest pharmacy businesses within one year; give FTC and DOJ authority to enforce the ownership ban; require FTC and DOJ to issue divestiture guidance within 30 days; and impose penalties for missed divestment milestones by requiring 10 percent of profits to be placed into escrow each month.

The legislation would also create civil enforcement mechanisms by authorizing HHS OIG, DOJ, FTC, state attorneys general, and harmed individuals to bring actions for violations. Available remedies would include treble damages, attorney’s fees, injunctions, disgorgement, and other equitable relief, with disgorged funds directed to support harmed communities and overcharged consumers. In addition, the bill would require FTC and DOJ review of all required divestitures, regardless of whether the transactions meet normal reporting thresholds; allow FTC or DOJ to block transactions that would harm competition or recreate conflicts of interest; and require quarterly compliance reports to Congress.

 

The reintroduction of the Patients Before Monopolies Act is significant and reflects continued congressional interest in structural PBM reform, not merely transparency or disclosure. While the bill faces a difficult legislative path – especially this year – it reinforces a broader policy trend toward scrutinizing vertical integration and ownership conflicts within the pharmacy and prescription drug markets.

 

Hearings

 

 

Chairman Bill Cassidy, M.D. (R-LA) emphasized that health care affordability has become one of the largest financial burdens confronting American families and businesses, and he highlighted the need for greater transparency across the health care system. Witnesses raised concerns regarding consolidation, vertically integrated insurers and PBMs, and the impact of these business models on patients, providers, and community-based pharmacies. Kathy Oubre, CEO of the Pontchartrain Cancer Center, testified that consolidation in the health care marketplace has increased costs and limited patient choice without corresponding improvements in quality.

 

Independent pharmacist T.J. Woodard testified that PBMs have become one of the major drivers of rising prescription drug costs and reduced competition. He argued that vertically integrated PBMs now exercise substantial control over pricing, pharmacy access, and reimbursement decisions, placing financial pressure on independent pharmacies and limiting patient choice.

 

Federal Regulatory Activity

 

 

OIG initiated the review in response to stakeholder concerns that vertical integration may contribute to higher drug costs, anticompetitive behavior, and negative effects on independent pharmacies. For purposes of the report, OIG defined vertical integration as the consolidation of Part D sponsors with PBMs, while also noting that pharmacies may be affiliated with sponsors or PBMs.

 

The report found that, for selected drugs, net drug costs were generally similar for vertically integrated Part D sponsors and other sponsors, but the path to those net costs differed. Vertically integrated sponsors generally paid pharmacies more upfront but recouped more later through rebates and fees, while other sponsors paid less upfront and received less back later. OIG also found that vertically integrated sponsors paid their own pharmacies slightly less than other pharmacies, though data limitations prevented OIG from fully accounting for later payment adjustments that can reduce what pharmacies ultimately receive.

 

Significantly, OIG noted that the full impact of vertical integration, particularly on pharmacies, remains difficult to determine because of limitations in available Part D data and recent shifts in the market.

 

 

The announcement expands the number of medicines available through the platform by nearly seven times. While the initiative is not a PBM reform measure, it reflects continued public and political interest in alternatives to the traditional PBM-based prescription drug pricing system. The Administration’s emphasis on direct-to-consumer purchasing models also reinforces the broader policy conversation around transparency, cash pricing, and efforts to reduce reliance on opaque intermediary arrangements.

 

Other Policy Activity

 

 

The Members emphasized that the CAA represented years of bipartisan work to increase PBM accountability and transparency and that meaningful implementation will require active oversight and guidance from DOL and EBSA. They specifically urged EBSA to use its authority to give full effect to the rebate pass-through requirement and the bona fide service fee standard.

 

Legislative Outlook

 

May congressional activity reflected a familiar but increasingly defined landscape. PBM reform continues to generate bipartisan attention, and lawmakers remain willing to introduce bills, hold committee hearings and even markups, and press federal agencies for stronger implementation. However, the prospects for major additional PBM legislation this year remain limited unless a viable legislative vehicle emerges.

 

The strongest near-term opportunity for forward momentum continues to be implementation and oversight of the PBM reforms enacted in the Consolidated Appropriations Act, 2026. The recent congressional letter to EBSA is a useful example of the type of oversight activity that can help ensure the enacted reforms are implemented in a meaningful and enforceable manner.

 

At the same time, targeted PBM legislation remains valuable even if immediate passage is unlikely. Bills such as the PBM Kickback Prohibition Act and the PBM Act help sustain political pressure, define future policy options, and keep member offices engaged on specific aspects of PBM reform, including consultant conflicts, vertical integration, pharmacy ownership, and patient access.

 

Budget Reconciliation Outlook

 

The budget reconciliation outlook became less favorable for health care and PBM-related provisions this past month. Earlier in the year, some policymakers and outside stakeholders discussed the possibility that a second reconciliation package could become a broader vehicle for health care savings or prescription drug reforms. That possibility now appears increasingly remote.

 

The current Reconciliation 2.0 effort has narrowed substantially and is now focused primarily on immigration and border security funding. As currently structured, it is not expected to serve as a meaningful health care vehicle and is unlikely to carry Medicare, Medicaid, ACA, prescription drug, or PBM reform provisions. Unless congressional leadership unexpectedly reopens the scope of the package, which appears unlikely at this stage, Reconciliation 2.0 should not be viewed as a realistic pathway for advancing pharmacy-related priorities.

 

Discussion of a potential Reconciliation 3.0 package has also become more uncertain. While some Administration officials and House Republicans have floated the possibility of another reconciliation bill later this year, the practical challenges are growing. There are only a limited number of legislative weeks remaining before the midterm elections, and Congress must still address other major priorities in a highly compressed calendar. Moving another budget resolution, developing committee instructions, drafting legislation, clearing House and Senate committees, surviving Byrd Rule review, navigating another vote-a-rama, and resolving any House-Senate differences would be a major undertaking under the best of circumstances.

 

As a result, talk of a third reconciliation package appears to be getting quieter, and doubts about its viability are increasing. To the extent a third package remains under discussion, the most likely areas of focus appear to be fraud, waste, immigration-related provisions, defense or national security priorities, and other items with clearer budgetary effects. A broader health care package is possible in theory, but it is not yet supported by a clear legislative path.

 

Even if health care provisions were included in a later reconciliation package, PBM reform would face additional procedural hurdles. Many PBM reforms are regulatory in nature and may not produce the direct federal budgetary effects required under the Senate’s Byrd Rule. Previous reconciliation efforts have already demonstrated that PBM-related provisions can be vulnerable to procedural challenges if they are viewed as primarily policy changes rather than budgetary measures.

 

Accordingly, reconciliation should be viewed as a low-probability path for significant PBM reform this year. The better approach is to continue preparing for any unexpected legislative opening while focusing most near-term energy on implementation, oversight, targeted legislation, and relationship-building ahead of the September fly-in and the next Congress.

 

Prepared by Steven Irizarry, Managing Partner, and Casey Davison, Partner.