PBM Reform Just Became Law: Here’s Why It Matters For Employers

This week, federal PBM reform legislation was enacted, establishing clearer expectations around transparency, compensation, and reporting for pharmacy benefit managers. For employers and plan sponsors, the practical impact of this shift is real: clearer definitions, more auditable data, and fewer degrees of interpretation about what savings actually mean. Employers have been asking for clarity for years; this bill finally moves those expectations into enforceable standards.

As Joe Shields, CEO of Transparency-Rx, simply put it during a recent PBM reform press conference, “Rebates and discounts belong to the plan and the patient, not to intermediaries, not to offshore entities, not to accounting structures designed to obscure where dollars actually go.” That concept—long discussed in industry circles—is now embedded into a framework that makes it easier for employers to see what is contracted, what is delivered, and how performance is measured. The legislation strengthens pass-through expectations, expands disclosure requirements, and adds standardized reporting so plans can verify what they are paying for instead of relying on opaque summaries.

What This Means In Practice

At its core, the reform package reinforces three areas employers care deeply about:

• What flows back to the plan: Pass-through of rebates and other remuneration is now defined with greater clarity.

• What you can verify: Standardized reporting and expanded audit rights give plans tools to reconcile contractual guarantees with delivered results.

• What is auditable: Clearer definitions and reporting obligations reduce ambiguity in performance measurement.

This matters because, in practice, employers have historically had to interpret or infer whether a PBM’s definitions aligned with their expectations. As our own Alan Pannier, Chief Strategy Officer, explained, “This bill replaces subjectivity with hard data.” With standardized reporting and audit rights, plans should be able to see comparable data, regardless of the PBM.

The legislation also expands disclosure and transparency expectations to affiliated entities and intermediaries, better reflecting how the modern pharmacy benefit ecosystem actually operates. Employers will now have clearer sight lines into compensation structures and revenue flows beyond a single headline guarantee.

Why Now

Drug costs continue to grow, specialty medications continue to claim larger shares of spend, and plans are increasingly accountable for the outcomes of their pharmacy dollars. Employers have been asking for structures that allow them to understand the “how” behind savings and to verify performance with data they can audit.

In this context, the bill aligns federal expectations with what forward-leaning employers and modern PBMs have been seeking for years: verifiable, auditable, and consistent data that reflects real economic alignment, not just marketing claims.

What This Means For Employers Today

Employers and consultants should start asking different questions of PBMs, such as:

• Are your guarantees defined in a way that can be independently measured?

• Can your PBM provide standardized reporting that matches what you see in your own systems?

• Are compensation flows transparent and auditable, or dependent on narrative interpretation?

As Alan noted, “This doesn’t just help regulators. It helps our clients, which are employers and health plans, so that they know exactly what they’re paying for.” That’s the bottom line: this reform doesn’t change what employers want, it clarifies how they can validate it.

SmithRx’s Position

SmithRx was built for this environment. Our model already aligns with the principles these reforms reinforce: full pass-through economics, clearly defined guarantees, auditable reporting, and alignment between payer and PBM interests.

Rather than being advantageous for any one company, this legislation raises the bar on what employers should expect from any PBM managing a meaningful portion of their healthcare spend: less interpretation, more verification.

That’s why this moment matters. As Alan added, “Transparency is how markets self-correct. When information flows freely, bad actors are held accountable, competition thrives, and the market naturally improves over time.” These reforms move the industry closer to that standard by making transparency structural instead of optional.

SmithRx already operates this way. And as employers evaluate PBMs in 2026 and beyond, we believe they’ll be better served when clarity and alignment are the baseline, not the exception.