CMS Advances Pharmacy Benefit Manager Reforms Following Congressional Action

The Centers for Medicare & Medicaid Services (CMS) is proposing new transparency requirements for pharmacy benefit managers (PBMs), building on legislation Congress passed earlier this year to address prescription drug pricing practices that can drive up costs for patients and health plans.

The proposed rule would require greater disclosure of PBM compensation and financial arrangements under Medicare Part D. It follows years of concern that PBMs can profit from complicated pricing arrangements that make prescription drugs more expensive without delivering corresponding savings to patients.

Congress Passed Major PBM Reforms Earlier This Year

PBMs negotiate prescription drug prices, administer pharmacy benefits, and help determine which medications receive preferred coverage under insurance plans. While these services can help control costs, PBM compensation arrangements have raised concerns about whether financial incentives encourage the use of more expensive medications.

The Center for a Free Economy (CFE) has previously advocated reforms to address these practices. In 2025, CFE joined a coalition of conservative organizations urging Congress to pass common sense PBM reforms. The coalition supported greater transparency, changes to PBM compensation, and stronger competition in prescription drug markets.

Congress responded to many of these concerns in February 2026 by passing PBM reforms as part of the Consolidated Appropriations Act of 2026. The legislation established new disclosure requirements and changes to how PBMs can be compensated for services provided under Medicare Part D.

Beginning in 2028, PBM compensation under Medicare Part D will generally be limited to flat, fair-market-value service fees rather than payments tied to drug prices or rebates. The changes are intended to reduce financial incentives that could favor higher-priced medications over less expensive alternatives.

CMS Proposes Additional Transparency Requirements

The new CMS proposal would implement provisions of the February legislation by requiring PBMs to report more information about their compensation, prescription drug spending, and financial relationships with drug manufacturers.

These disclosures would give Medicare Part D plans greater visibility into the financial arrangements negotiated on their behalf. Better access to pricing and compensation information could help plans evaluate PBM performance and negotiate more competitive contracts.

The proposal also addresses Medicare Advantage provider directory accuracy and includes additional protections for low-income Medicare beneficiaries, including the elimination of certain generic drug copayments beginning in 2028.

CFE Takeaway

The latest CMS proposal builds on reforms CFE and other conservative organizations advocated before Congress acted earlier this year. Greater transparency in PBM compensation can help address financial incentives that distort prescription drug pricing and limit competition.

Implementation will be important. Medicare plans should have the information needed to evaluate PBM contracts, while pharmacies and patients should benefit from a more competitive prescription drug market.

Reducing prescription drug costs requires addressing the underlying incentives that influence prices. Transparency and competition offer a more sustainable approach than expanding government price controls.