Recent reforms in the Consolidated Appropriations Act (CAA) of 2026 could significantly reshape the prescription drug pricing landscape by altering how pharmacy benefit managers (PBMs) are compensated and increasing transparency across the supply chain. The law prohibits PBMs from receiving compensation tied to drug list prices and requires them to pass through 100% of manufacturer rebates, fees, and discounts to plan sponsors by August 2028.
These changes aim to dismantle long-criticized rebate structures and limit financial incentives that historically encouraged higher list prices. With new enforcement authority and funding, the Centers for Medicare & Medicaid Services (CMS) will oversee compliance, audit fee arrangements, and arbitrate disputes between pharmacies and PBMs.
Jesse Dresser, partner and head of Frier Levitt’s Pharmacy Practice Group, notes that the reforms may shift the focus of pricing scrutiny from PBMs to drug manufacturers. As PBMs face tighter limits on rebate-driven revenue, manufacturers may need to more directly justify list prices and rework longstanding contracting models.
“The laws remove the excuses on both sides to get to a more rational drug pricing paradigm than the one we’ve had for the past 20-plus years,”
Dresser explains that the combined impact of the CAA and the Inflation Reduction Act could accelerate a move toward value-based pricing by removing incentives tied to inflated list prices. He emphasizes that percentage-based PBM fees will likely need to transition to flat, fair-market-value service fees, prompting manufacturers to reconsider how they structure PBM relationships and manage rebate dollars.
According to Dresser, policymakers hope these changes will reset market dynamics by eliminating incentives that previously drove list price increases, creating an opportunity for a more rational and transparent drug pricing framework.
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