PBM in the Spotlight: Reform Ushers in a New Era of Transparency

Transparency Is a Tool, Not a Total Solution

The latest reform has come in distinct waves of executive orders, legislation, and proposed regulation. As of April of 2026, these three key items have either been signed/passed or are proposed and open to comment:

• Executive Action: The Executive Order (EO 14273) that effectively created TrumpRx is a commendable step forward for transparency, but modern PBMs like Smith still deliver further unmatched savings with true lowest net cost drugs.

• Legislative Progress: We supported legislative efforts for the 2026 Consolidated Appropriations Act (CAA) and continue to lead the industry in PBM innovation.

• Proposed Regulation: We are in philosophical alignment with the U.S. Department of Labor’s proposed rule, under Employee Retirement Income Security Act (ERISA), for protecting fiduciaries, eliminating shadow fees, and empowering employers with data.

These actions are net positive and a step in the right direction toward a more transparent future for pharmacy benefits, but they aren’t the complete answer to the problems that plague the industry. Think of them instead as helpful tools you can leverage to get better value for your plan; a useful flashlight to help shed much needed light on opaque, black box systems.

What these passed and proposed reforms are not is a complete overhaul of the legacy system. The new mandates aren't necessarily stopping PBMs from playing games; they are simply making those games harder to hide. For the first time, if your PBM is gaining more from your ‘savings’ than you are, that data is finally becoming public record.

A Heightened Standard for PBMs: CAA Rights for Plans

The February signing of the Consolidated Appropriations Act (CAA) ushered in a shift in the power dynamic between you and your PBM. For years, PBMs hid behind a complex system of smoke and mirrors. 

Now, employers and plan sponsors get:

While the compliance deadline for these different pieces of the CAA is in 2028/2029, we’re already ahead of it at SmithRx. We deliver all this, and more, to clients as standard, because of our commitment to better, radically transparent pharmacy benefits. 

Modernizing Your RFP Process for Reform-Readiness

Chances are, your current RFP (Request for Proposal) process was designed with a fundamental bias towards legacy institutions, and that’s no fault of yours or your consultants’. The industry does everything it can to keep it that way. Yet, an ‘outdated’ RFP strategy can mean you’re likely leaving money on the table and exposing yourself to fiduciary risk. 

To navigate the new, ‘mandated’ normal post CAA, your procurement process needs an upgrade.

Move Beyond Discount Guarantees

Many ‘legacy’ RFPs are predicated on AWP, or Average Wholesale Price. AWP was intended to be a universal pricing baseline, but it has since morphed into a speculative price tag. AWP is frequently criticized as an unreliable and easily manipulated figure that is disconnected from actual acquisition costs. When PBMs negotiate discounts off this inflated baseline, the plan sponsor’s final bill remains unnecessarily expensive because the starting price was intentionally high.

Legacy PBM proposals will guarantee certain discounts off of AWP. In a vertically integrated world where PBMs own the manufacturers and set the AWP themselves, these "guarantees" are meaningless.

Move to prioritizing vendors that operate on a cost-focused model. Rather than gearing toward the largest discounts, instead align with a partner that always optimizes for the lowest net cost instead.

Demand Data-Driven Transparency

The new Department of Labor proposal emphasizes the plan sponsor’s right to data access. If passed, this rule would require PBMs and their affiliated brokers to pull back the curtain on every dollar they touch, including manufacturer rebates and true prices they pay to pharmacies for each claim. By requiring these disclosures both upfront and every six months, the DOL is turning transparency into an enforceable standard.

You don’t need to wait for the potential rule to pass. To bake this into your next RFP, require bidders to provide a mock-up of their initial disclosure (including drug-level estimates of indirect compensation) and secure regular audit rights to verify the accuracy of those claims. 

PBM reform and regulation is ultimately about alignment. Whether it’s through the DOL’s focus on compensation disclosure or the FTC’s pressure on legacy PBM monopolies, the goal is to ensure the entity executing plan decisions isn't the one profiting from the high cost of the drug.

As Alan Pannier summarized during the session, this new era of transparency is about visibility, not just rules: 'It’s not going to fix bad behavior, but it’s going to give an employer a flashlight to be able to open up and expose, potentially, the black box that exists.'

Looking to hold potential PBM partners to a higher standard? Download our 5 Crucial Questions to Ask Your Pharmacy Benefit Manager.

You can dive even deeper into Alissa and Alan’s full discussion in our complete webinar, PBM Reform Update April ‘26: Navigating the New, “Mandated” Normal, here.