Pharmacy Benefit Managers (PBMs) — the powerful intermediaries managing prescription drug benefits for insurers, employers, and government programs — are facing new levels of scrutiny from regulators, lawmakers, and industry stakeholders.
FTC: PBMs Inflate Drug Prices
The increased oversight may be in response to a recent Federal Trade Commission (FTC) report that alleges major PBMs have inflated drug costs, resulting in billions of dollars of revenue for the PBMs.[1] The report claims these profits were largely driven by overcharging through affiliated pharmacies, often at the expense of consumers and independent drugstores.
States Push for Reform
PBMs can expect regulation at both the state and federal levels. The purpose of such regulation appears to be due to cost-containment goals, although the proposed regulation is broad and wide-reaching. Modern Healthcare reports there are more than 1,500 state-level bills related to pharmacy benefits, with many of the bills focusing on pricing, rebate pass-through, and PBM entity structuring.[2]
Some state regulations include the following:
- California (SB41) passed new laws banning spread pricing and increasing transparency.
- Alabama (SB252) now requires PBMs to reimburse independent pharmacies at or above Medicaid rates.
- Arkansas (HB1150/Act 623) tried to ban PBMs from owning pharmacies altogether — though the law is currently in litigation.[3]
These reforms aim to dismantle conflicts of interest and protect small pharmacies from predatory pricing and reimbursement practices.
Congress Eyes Federal Action
At the federal level, legislation such as H.R. 4317 – the PBM Reform Act of 2025 — was gaining bipartisan momentum. The bill was aimed at eliminating spread pricing in Medicaid, mandating transparency in rebate and reimbursement practices, and preventing PBMs from profiting off inflated drug costs.[4] The American Medical Association and pharmacy advocacy groups have endorsed the bill, citing growing concern over vertical integration and conflicts of interest.[5]
Operational and Legal Shifts
Amid mounting pressure, some PBMs are adjusting internally – changing policies to reduce authorizations and barriers to medications. The new proactive approach is likely spurred by increased oversight as more PBMs voluntarily alter business practices in an attempt to stave off stricter regulations.
What’s Next?
With lawsuits, legislation, and growing public attention, the PBM sector is rapidly evolving. Stakeholders across healthcare — from providers to patients — should stay engaged as reforms continue to reshape how Americans access and pay for prescription drugs.
[1] https://www.ftc.gov/news-events/news/press-releases/2024/07/ftc-releases-interim-staff-report-prescription-drug-middlemen.
[2] https://www.modernhealthcare.com/politics-regulation/mh-pharmacy-benefits-at-crossroads-the-impact-of-legislative-reform/.
[3] https://www.nfp.com/insights/court-blocks-enforcement-of-arkansas-pbm-law/.
[4] https://www.congress.gov/bill/119th-congress/house-bill/4317/text.
[5] https://www.ama-assn.org/about/leadership/unchecked-power-pbm-industry-puts-patients-risk-harm; https://www.cmadocs.org/newsroom/news/view/ArticleId/50942/CMA-supports-bipartisan-PBM-reform-legislation.
