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The Consolidated Appropriations Act of 2026 (CAA) has introduced landmark changes that redefine how PBMs and employers operate. Key mandates include:

• 100% Rebate Pass-Through: PBMs must pass all manufacturer rebates and related fees directly to plan sponsors, eliminating hidden profits, for plan years beginning on or after August 3, 2028.
• Enhanced reporting: PBMs must provide more detailed reports on drug utilization and spending for plan years beginning on or after August 3, 2028, giving commercial group health plan sponsors unprecedented insight.
• Fee Disclosure Rules: The CAA updated existing compensation disclosure requirements, and the Department of Labor has proposed comprehensive rules requiring PBMs to disclose all fees and pharmacy spend details to employers.
• Fiduciary Responsibility: These reforms likely mean that employers will be held to stricter standards, requiring them to act prudently and in the best interest of plan participants. This includes maintaining transparent, well-documented benefit arrangements.

These reforms aim to increase transparency and accountability, but they also place a significant burden on employers to ensure compliance. Benefits advisors play a critical role in helping employers audit their PBM contracts, identify hidden fees, and align their plans with the new standards. 

While federal reforms set the baseline, state-level regulations are adding layers of complexity. Historically, the Employee Retirement Income Security Act (ERISA) shielded self-funded plans from state insurance mandates. However, recent state actions have narrowed these protections, forcing employers to navigate dual compliance requirements.

Key state-level actions include:

• NADAC-Based Reimbursements: Mandates requiring PBMs to reimburse pharmacies based on the National Average Drug Acquisition Cost.
• Minimum Dispensing Fees: Designed to level the playing field for independent pharmacies and increase market competition.
• Fiduciary Standards for PBMs: States like California are imposing fiduciary duties on PBMs, legally requiring them to act in the best financial interests of their clients.
• Network Management: Oklahoma and Tennessee, for example, have tried to impose pharmacy network restrictions on ERISA plans, but recent court decisions handed a victory back to employers on this issue.

Navigating the intersection of federal and state regulations requires a proactive, data-driven approach. Here are actionable steps benefits advisors can take to support their clients:

1. Audit PBM Contracts: Review existing contracts to identify hidden fees, misaligned incentives, and areas of non-compliance with new regulations.
2. Benchmark Performance: Compare PBM pricing models, transparency practices, and clinical strategies against industry standards and alternative solutions.
3. Educate Clients: Treat regulation as a renewal input, not a footnote. This is especially critical for multi-state employers.
4. Set Expectation with Clients: While these legislative changes result in more ore variation, litigation, and noise, they also offer up more opportunity to demand clarity.

Why It Matters 

The pharmacy benefits landscape is more complex than ever, but it’s also full of opportunity. Advisors who adapt to these changes and provide clear, actionable guidance will solidify their value in the evolving PBM market. By focusing on transparency, compliance, and cost control, benefits advisors can help self-funded employers achieve sustainable financial success while improving member care.