U.S. House Passes PBM Reforms: Where Are We Now?

The United States House of Representatives recently passed bipartisan legislation aimed at reforming PBMs to increase transparency and lower drug costs. These reforms include de-linking compensation from drug prices in Medicare by 2028, requiring 100% rebate passthroughs to employers, and banning spread pricing in Medicaid. These reforms, which many argue are long overdue, may impact state legislation with similar aims. To provide context, we have compiled an overview of state PBM legislation, along with a more detailed examination of what the federal regulations might entail.

Pharmacy Benefit Managers (PBMs) act as intermediaries between drug manufacturers, pharmacies, health plans, and patients. They negotiate rebates, manage formularies, and handle prescription reimbursements. However, critics argue that PBMs often prioritize profits through practices like spread pricing, rebate retention, and steering patients to affiliated pharmacies, which drives up costs and squeezes independent pharmacies. In response, several states have enacted bold reforms to promote transparency, fairness, and cost savings. As of early 2026, these efforts vary in scope and aggressiveness, with some facing legal hurdles. Below, we explore recent state PBM reforms, highlighting their key provisions and impacts.

West Virginia

West Virginia has been at the forefront of PBM oversight, emphasizing licensure, fair practices, and direct benefits to consumers. PBMs and auditing entities must obtain licenses from the West Virginia Office of the Insurance Commissioner, with renewals every two years to ensure ongoing compliance.

A cornerstone is HB 2263, enacted in 2021, which mandates that PBMs pass 100% of manufacturer rebates to plan sponsors or employers. This has yielded tangible results: a 2024 review by the Insurance Commissioner found that the rebate pass-through law slashed the average 2025 small-group insurance rate increase by 52%, demonstrating how transparency can translate to premium reductions.

Additional safeguards include prohibitions on reimbursing affiliated pharmacies at higher rates than independents, preventing discrimination in reimbursements or network exclusions. Network adequacy rules protect patients’ rights to choose their pharmacy, while the Pharmacy Audit Integrity Act ensures audits are fair and transparent. These measures collectively aim to level the playing field and curb anti-competitive behaviors.

Arkansas

Arkansas took a hardline stance on PBMs with Act 624 (HB 1150), enacted in 2025 and slated for Jan. 1, 2026, implementation. Signed by Gov. Sarah Huckabee Sanders, the law bans PBMs from owning or operating retail or mail-order pharmacies, targeting vertical integration and “self-dealing” where PBMs steer patients to their own facilities.

However, the reform hit a snag when a federal judge issued a preliminary injunction on July 28, 2025, citing constitutional concerns, including potential violations of the Commerce Clause and conflicts with federal programs like TRICARE. Major PBMs such as CVS Caremark, Express Scripts, and OptumRx challenged the law in court, arguing it oversteps state authority.

The legislation includes a narrow exception for pharmacies handling rare or specialty drugs, but is otherwise one of the most stringent state-level attacks on PBM influence. If upheld, it could significantly reduce steering and promote competition, though its fate remains uncertain pending final resolution.

Alabama:

Alabama’s Community Pharmacy Relief Act (SB 252) went into effect Oct. 1, 2025, and focuses on protecting independent pharmacies from predatory practices. It requires PBMs to reimburse these pharmacies at rates no lower than the Alabama Medicaid Agency rate, including a $10.64 dispensing fee.

The law bans spread pricing—where PBMs pocket the difference between what they charge plans and pay pharmacies—and mandates 100% rebate pass-through to plan sponsors. It also prohibits extra fees for network participation, charging patients more than a drug costs, and steering patients to PBM-affiliated pharmacies.

Enforcement falls to the Alabama Department of Insurance, with civil penalties starting at $1,000 per violation. This reform addresses the closure risks faced by independent pharmacies due to below-cost reimbursements, aiming to sustain rural access to medications.

Florida

Florida’s Prescription Drug Reform Act (SB 1550), signed in May 2023 and mostly effective Jan. 1, 2024, stands as a model of thorough PBM regulation. PBMs must now license as Insurance Administrators with the Florida Office of Insurance Regulation (OIR).

Key features include banning spread pricing in favor of a pass-through model, requiring 100% rebate remittance to health plans, and prohibiting mandatory mail-order use unless a drug is unavailable at retail. Networks must meet or exceed Medicare Part D adequacy standards and can’t be limited to PBM affiliates.

Pharmacy protections ban claw backs and retroactive recoupments, while providing appeal processes for below-cost reimbursements. PBMs must disclose affiliates to the OIR.

In 2025, oversight increased with biennial examinations starting Jan. 1 and data requests for unredacted claims to audit compliance. However, ERISA preemption challenges loom for self-funded plans, echoing disputes in other states.

Idaho

Idaho’s HB 596, effective Jan. 1, 2025, aligns with reforms in states like Florida. It bans spread pricing, enforces pass-through models, and requires 100% rebate pass-through to health plans.

PBMs can’t mandate mail-order unless a drug is retail-unavailable, and networks must match Medicare Part D standards without excluding non-affiliates. Contracts must include reasonable dispensing fees. All PBMs register annually with the Idaho Department of Insurance (DOI) for a $300 fee, disclosing costs, fees, and rebates.

Despite these steps, late-2025 reports of persistent low reimbursements prompted the DOI to hire a dedicated examiner for complaints. Federally, Idaho Sen. Mike Crapo introduced the PBM Price Transparency and Accountability Act in Dec. 2025, pushing to delink PBM pay from rebates in Medicare Part D.

Utah

Utah’s HB 257, effective as of May 7, 2025, enhances existing rules under Utah Code. It requires health plans to use rebates solely for enrollee benefits, such as reducing out-of-pocket costs, premiums, or enhancing benefits.

PBMs must offer self-funded plans a no-spread-pricing option and can’t tie pharmacy participation across multiple networks. Public employee plans get specific contracting parameters.

Broader regulations include annual licensing and reporting on rebates/fees, a 30-day notice for remuneration reductions, and parity in reimbursing affiliates versus independents. PBMs can’t block pharmacy delivery services or charge higher copays for them, and MAC appeals must include denial reasons and alternative sources.

The Utah Insurance Commissioner aids in educating pharmacies on rights, fostering a supportive environment.

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These state reforms reflect a growing consensus that PBM practices need reining in to lower drug costs and protect pharmacies and patients. From rebate pass-throughs in West Virginia and Alabama to bans on vertical integration in Arkansas, the approaches vary, but all share goals of transparency and competition. Legal challenges, like those in Arkansas and potential ERISA issues in Florida, highlight the tension between state innovation and federal oversight. With federal legislation advancing, 2026 could mark a turning point. Stakeholders— from independent pharmacists to employers—will watch closely as these changes unfold, potentially reshaping the prescription drug ecosystem for the better.

While states lead the charge, federal action is gaining traction. The PBM reforms are part of the FY2026 funding package, now in the Senate, and target “middleman” fees and steering, potentially boosting reimbursements. If enacted, most reforms take effect by 2029, complementing state efforts and addressing interstate inconsistencies.