Congress Just Cracked Open the Black Box of Drug Pricing: What PBM Transparency Means for Healthcare

Pharmacy Benefit Managers have operated in the shadows for decades. That era is ending.

On February 3, 2026, the Consolidated Appropriations Act of 2026 became law, and tucked inside the massive spending bill is what the National Community Pharmacists Association calls "the first major PBM reform in Medicare Part D in nearly 20 years." The legislation forces PBMs to disclose how they handle drug pricing, rebates, and fees, pulling back the curtain on an industry that touches nearly every prescription filled in America.

For employers, payers, providers, and anyone trying to understand what actually drives drug costs, this is a watershed moment.

Why PBMs Matter (and Why You Should Care)

PBMs sit between drug manufacturers, health plans, and pharmacies. In theory, they negotiate lower drug prices on behalf of employers and insurers. In practice, the three largest PBMs, CVS Caremark, Express Scripts (Cigna), and OptumRx (UnitedHealth), control roughly 80% of all prescription drug claims in the United States. The top six PBMs manage more than 90%.

That kind of market concentration might be fine if incentives were aligned with lowering costs. But a landmark FTC investigation found that the opposite has often been true. The FTC documented billions of dollars in markups on specialty generic drugs, widespread self-preferencing toward PBM-affiliated pharmacies, and business practices that the commission described as "inflating drug costs and squeezing Main Street pharmacies."

The opacity that allowed these practices to persist has been a feature, not a bug. Until now, most plan sponsors had little visibility into what their PBM was actually doing with the money flowing through the system.

What the New Law Requires

The legislation mandates that PBMs provide detailed, machine-readable reporting to group health plans on a semiannual basis. The scope of required disclosure is substantial and covers the full lifecycle of a drug's cost as it moves through the PBM:

Drug-level transparency. PBMs must report what drugs were covered and utilized, down to the National Drug Code (NDC), along with what the plan paid the PBM versus what the PBM paid the pharmacy.

Spread pricing disclosure. The exact difference between what the PBM charges the plan and what it reimburses the pharmacy must be reported. This practice, where PBMs quietly pocket the spread, has been one of the most criticized aspects of the current system.

Rebate and fee accounting. PBMs must disclose gross versus net drug costs after accounting for rebates and fees, as well as the manufacturer rebates and discounts received by both the plan and the PBM. Starting in 2028, PBMs will be required to pass through 100% of rebates to the payer.

Member cost visibility. Out-of-pocket costs paid by plan members must be reported, along with utilization and spend broken down by therapeutic class.

Formulary decision transparency. Plans will receive clear disclosure of formulary decisions and changes, including the rationale behind them.

Affiliated pharmacy comparisons. When a PBM steers prescriptions to a pharmacy it owns, detailed comparisons must be provided, including whether cheaper options existed elsewhere in the network.

Failure to comply carries teeth: civil monetary penalties of $10,000 per day for unreported information, with additional penalties for submitting false data.

The Timeline: When Will This Data Actually Be Available?

The law is signed, but as you might have guessed the data will not start to flow for some time. Here's the realistic timeline:

2026 to 2027: Rulemaking and preparation. Federal agencies, particularly the Department of Labor and CMS, will develop the specific rules and formats for PBM reporting. The DOL has already issued a proposed rule requiring PBMs to disclose compensation, rebates, and related fees to self-insured plan fiduciaries. That rule is currently in its public comment period.

2028: Mandatory PBM reporting begins. The core provisions take effect 30 months after signing. PBMs will be required to start providing the detailed reporting described above to group health plans.

2029: Full data availability for calendar-year plans. Most practical data disclosures under the new regime will begin appearing in 2029 for employers and plan sponsors operating on a standard calendar year.

State-level efforts are moving faster. Some states, such as California with SB 41, have already enacted PBM transparency requirements with data disclosure obligations that are taking effect sooner than the federal timeline.

It's also worth noting that CMS has temporarily delayed certain public pharmacy pricing transparency efforts tied to existing rules, so a centralized, publicly available PBM pricing dataset does not yet exist.

So What?

Transparency alone doesn't fix a broken system. But it fundamentally changes the leverage dynamics.

For self-funded employers and plan sponsors, this is the data they've been asking for. Today, most employers negotiating PBM contracts are doing so with incomplete information. They may not know what their PBM earns from spread pricing, how rebate dollars are actually allocated, or whether their members are being steered to higher-cost affiliated pharmacies. With standardized reporting, employers can benchmark their PBM's performance, compare costs across the network, and renegotiate contracts with real data in hand.

For payers and health plans, the new disclosures create both opportunity and obligation. Plans that proactively analyze PBM data will be better positioned to control costs and meet fiduciary responsibilities to their members. Those that ignore the data risk leaving money on the table and falling behind competitors who use it effectively.

For providers and pharmacies, especially independent ones, the transparency requirements could help level a playing field that the FTC has documented as deeply tilted. Clearer visibility into reimbursement rates and self-preferencing patterns gives pharmacies better footing when negotiating with PBMs and stronger evidence when those negotiations break down.

For consultants and brokers, the new data creates a significant opportunity to deliver measurable value to clients. Those who build the analytical capability to interpret PBM disclosures will differentiate themselves in a market where advisory services are increasingly commoditized.

Challenges

The PBM industry, through its trade association PCMA, has argued that confidentiality is necessary to negotiate favorable pricing. They've warned that increased transparency could raise costs. It's a claim worth examining, but the FTC's findings, documenting over $7.3 billion in excess revenue from specialty generic markups alone between 2017 and 2022, make it a harder argument to sustain.

The real challenge may be less about whether the data is disclosed and more about whether anyone can effectively use it. Machine-readable PBM data at the NDC level, covering rebates, spreads, utilization, and formulary decisions across thousands of drugs and pharmacy locations, is complex. Without the right tools and analytical expertise, a 200-page semiannual PBM report could easily gather dust.

This is where the next phase of healthcare price transparency gets interesting. The organizations that thrive won't just be the ones that receive the data. They'll be the ones that can actually analyze it, spot anomalies, and translate raw disclosures into better contracts and lower costs.

A Good Start

The Consolidated Appropriations Act of 2026 doesn't solve drug pricing in America. But it does something that years of incremental reform have failed to accomplish: it puts the data into the hands of the people who are paying the bills.

Hospital price transparency rules, which took effect in 2021 and gained real enforcement momentum in 2023 and 2024, showed what happens when healthcare pricing data becomes available at scale. An entire ecosystem of analytics and market intelligence emerged to help stakeholders make sense of it. PBM transparency is poised to follow the same trajectory, with even higher stakes given the trillions of dollars flowing through the pharmacy supply chain.

The clock is ticking toward 2028. For employers, payers, and healthcare organizations, the time to start preparing is now: understanding what data will be available, building the internal capability to analyze it, and identifying the partners who can help turn disclosure into action.

The black box is opening. The question is whether you'll be ready to look inside.