What the 2026 federal PBM law changes, and what states did first

On Feb. 3, 2026, the president signed Public Law 119-75¹, the Consolidated Appropriations Act, 2026, a spending package for the fiscal year that ended Sept. 30. Its health division carried the first broad federal rules for pharmacy benefit managers, the firms that run prescription drug benefits for Medicare drug plans and employers. Two days later the House Energy and Commerce Committee's majority called them³ "long-awaited and historic reforms for prescription drug middlemen."

Very little of it has taken effect. The Medicare provisions start with the 2028 plan year, the employer-plan rules apply to plan years beginning 30 months after enactment, and new standards for pharmacy contracts apply in 2029. States got there first. According to the National Academy for State Health Policy⁴, all 50 states have now passed at least one law regulating PBMs.

For generics, the details matter most. Unbranded generics made up 90 percent of US prescription volume in 2022, according to a 2024 HHS analysis⁵. PBMs decide what pharmacies are paid for those prescriptions, usually through the maximum allowable cost lists and spread arrangements described in our guide to how pharmacies get paid.

What Congress put in the law

Division J of the act holds the PBM language. Two sections rewrite parts of Medicare Part D. Two amend the federal laws that govern employer health plans. A fifth, aimed at generic drug makers, changes how FDA answers questions about inactive ingredients. The dates below come from the enrolled bill text².

How delinking works in Medicare Part D

Section 6224 is the provision usually described as delinking. Beginning with 2028 plans, a PBM working for a Part D plan sponsor, along with its affiliates, "shall not derive any remuneration" connected to Part D drugs other than bona fide service fees. The law defines those as fees at fair market value for a service actually performed, and it says such a fee "must be a flat dollar amount." It cannot be based on a drug's wholesale acquisition cost, on a benchmark such as average wholesale price, or on the size of rebates. Our explainer on WAC, AWP and the other benchmarks covers what those terms measure.

Manufacturer rebates can still move through a PBM, but only if they are "fully passed through" to the plan sponsor. A PBM that keeps money it should not must disgorge it, and sponsors have to certify compliance to HHS every year. Congress gave CMS $113 million and the HHS Office of Inspector General $20 million, both for fiscal 2026, to carry out the section.

Generic prices show up by name in the reporting requirement. For each covered drug, the PBM's report must give the average amount the plan paid pharmacies, broken out by dispensing channel, next to "the average National Average Drug Acquisition Cost (NADAC)." NADAC is the federal survey of what pharmacies pay to buy drugs, explained in our NADAC guide. HHS must publish standard machine-readable formats for the reports by June 1, 2027. The law also bars HHS, GAO, the Congressional Budget Office and MedPAC from publishing the data in a way that identifies a specific PBM, pharmacy, manufacturer or plan, or reveals contract prices.

For a sense of scale, here is the benchmark those reports will use, for six common generics in GxRadar's analysis of CMS NADAC files¹² for October 2026. Full histories are on our price pages.

NADAC covers ingredient cost only. It leaves out the dispensing fee a pharmacy needs to cover staff and overhead, so a plan's reimbursement above NADAC is expected. The new reports will show how far above.

Pharmacy networks and the essential retail pharmacy list

Section 6223 writes into the statute a rule that Part D plans must permit "any pharmacy that meets the standard contract terms and conditions" to join their networks, and it adds a test those terms must pass. HHS has until April 1, 2027, to issue a request for information. The questions Congress listed include whether reimbursement and dispensing fees "sufficiently cover the ingredient and operational costs" of network pharmacies. Standards follow in 2028, they bind plan years starting Jan. 1, 2029, and by that date pharmacies must have a way to file allegations that a plan broke them.

Section 6223 also creates a federal category called the essential retail pharmacy, defined as a retail pharmacy not affiliated with a plan or PBM that has no other retail pharmacy within 10 miles in a rural area, 2 miles in a suburban area or 1 mile in an urban one. CMS must publish the list each year beginning with plan year 2028 and report at least every two years until 2034 on how those pharmacies are paid, including for generic drugs. Our pieces on independent and chain pharmacies and pharmacy deserts have the closure data behind that attention. GxRadar's summary of the FTC's study of pharmacy benefit managers covers the agency's findings on pharmacy networks.

Employer plans and the generic ingredient rule

Sections 6701 and 6702 reach the much larger commercial market. A PBM serving an employer group plan must send the plan a report at least every six months, in plain language and machine-readable form, and quarterly if the plan asks, on the same terms and at the same cost. Under the ERISA amendment in Section 6702, a PBM contract is not "reasonable" for a covered plan unless the PBM remits 100 percent of rebates, fees, alternative discounts and other manufacturer payments to the plan, within 90 days after each quarter ends. Plan fiduciaries who did not know about a missed payment get a safe harbor if they ask for it in writing and report the PBM to the Labor Department when it fails to pay within 90 days.

Section 6703 has nothing to do with PBMs. A company preparing a generic application can now ask FDA whether its product's inactive ingredients are "qualitatively and quantitatively the same" as the brand's, and if not, FDA must name the ingredient and the size of the deviation. Once FDA says a formulation matches, it generally cannot reverse itself after the application is filed. FDA rules already require that match for most injectable, eye and ear products under 21 CFR 314.94¹¹, so the change matters most there, as our explainer on Q1/Q2 sameness describes. Our explainer on how a generic gets approved covers the rest of the process.

What the states did first

State PBM laws are older and more varied. The one that set the legal ground rules came from Arkansas. Its Act 900 of 2015 required PBMs to update their maximum allowable cost lists when wholesale prices rose, which in practice keeps reimbursement at or above what a pharmacy paid for a generic. A PBM trade group argued that ERISA preempted it. On Dec. 10, 2020, the Supreme Court disagreed, with all eight participating justices joining the opinion⁶ holding that "Arkansas' Act 900 is not pre-empted by ERISA," according to the court's docket⁷.

Arkansas then went further. Act 624 of 2025⁸ barred PBMs from holding permits to operate pharmacies in the state, aimed at what the legislature called a PBM acting as "both a price setter and price taker." The law was due to take effect Jan. 1, 2026. In late July 2025, a federal judge in Little Rock preliminarily enjoined it¹⁰, finding it likely violated the Commerce Clause and, because of its effect on the military's TRICARE program, the Supremacy Clause, according to an analysis by the Arkansas Center for Health Improvement⁹. The state appealed.

The next fixed dates are federal ones: the CMS request for information on pharmacy contract terms, due by April 1, 2027, and the report formats due June 1, 2027. More background on the policy desk is at Law, patents and policy.