The federal government funding bill signed into law last week was a watershed moment for the pharmacy benefit manager industry, and significant new enforcement and litigation will likely follow as a regulatory vacuum begins to fill in, according to legal experts.
Signed into law on Feb. 3, the act creates a new regulatory landscape for pharmacy benefit managers operating in both federal and commercial sectors. Many of the reforms were designed to shift the industry from a rebate-driven model often criticized as opaque to one focused on fee and cost transparency, according to health and drug industry experts.
These legislative changes are occurring alongside a landmark $7 billion settlement by Cigna’s Express Scripts subsidiary that overhauls the PBM’s business model and resolves Federal Trade Commission allegations that it inflated insulin prices through “convoluted rebate games.”
The legislation also provides federal agencies and regulators with new enforcement teeth, although many core provisions of the act do not take effect until 2028 or 2029.
Jesse Dresser, Esq., Chair of the firm’s Pharmacy Practice Group, was quoted in this Law360 Healthcare Authority article, “PBMs Enter New Era of Legal Scrutiny.”
The article analyzes the major regulatory overhaul facing pharmacy benefit managers (PBMs) following enactment of the Consolidated Appropriations Act of 2026. The law reshapes rebate structures, mandates increased transparency, and grants federal agencies expanded enforcement authority across both commercial and Medicare markets.
Enforcement, Litigation & Industry Impact
Jesse emphasizes that the success of these reforms will depend heavily on whether the U.S. Department of Health and Human Services (HHS) has the resources to investigate what could be thousands of complaints annually. If enforcement lags, he predicts providers may sue to compel agency action and pursue direct claims against PBMs, particularly since HHS cannot obtain restitution for affected providers.
He also anticipates legal challenges from PBMs arguing that regulators are overstepping their authority, while noting that Congress’s grant of power to set “reasonable and relevant” contract terms may weaken that position.
Jesse further cautions health plans against complacency. Expanded transparency requirements may increase fiduciary exposure, and while rebates must be passed through to plans, it remains unclear whether patients will see lower out-of-pocket costs.
As scrutiny intensifies, pharmacies, plans, and PBMs should reassess contractual arrangements, compliance structures, and litigation risk in light of this new regulatory era.
For guidance on navigating PBM reform under CAA 2026, contact Jesse Dresser or a member of Frier Levitt’s Pharmacy Practice Group.
Please note: The full article is available through Law360 and requires a subscription to access.
