The Consolidated Appropriations Act of 2026 (CAA), which was signed into law by the President this afternoon, includes sweeping reforms aimed at lowering prescription drug prices.
On the same day that Council members visited Capitol Hill during our annual Legislative Summit, lawmakers codified a broad set of reforms aimed at the pharmacy benefit manager (PBM) market. These reforms include provisions championed by The Council, clarifying that PBMs are fully subject to ERISA’s compensation transparency obligations.
Read more in this memo from our legal team at Steptoe. (Council member login required.)
Most notably, the CAA affirmatively states that PBMs and third-party administrators (TPAs) must disclose compensation to plan fiduciaries. With this new provision, plan fiduciaries will not be permitted to enter into a contract with a PBM or TPA that has not satisfied this disclosure requirement.
This transparency fix has been at the top of The Council’s legislative agenda since 2021, when compensation disclosure requirements under the CAA mandated that brokers and consultants prospectively disclose their anticipated compensation under ERISA. Over the past five years, The Council has continuously pushed for explicit inclusion of pharmacy benefit managers as “consultants,” under the Act, given the pivotal role PBMs play in the pharmacy supply chain.
The CAA funds the Department of Health and Human Services through FY 2026 and extends several healthcare programs. It also provides funding for the Departments of Defense; Labor and Education; Transportation, Housing and Urban Development; and Homeland Security. Additional PBM provisions in the Act include:
- Federal Oversight Framework: The CAA creates a federal oversight framework for PBMs and related entities, imposing new data-sharing, reporting, and contract conditions.
- Extensive Data Reports for PBMs: PBMs must report extensive data to large employer plans (i.e., employers with an average of 100 employees during the preceding calendar or plan year and at least one employee on the first day of the calendar or plan year).
- Rebate Pass-Throughs and Audits: The CAA requires PBMs to pass through 100% of rebates and related remuneration, disclose all amounts, and undergo yearly audits.
The CAA did not appropriate funding to revive the Affordable Care Act’s expired premium tax credits and does not include policies from the President’s “Great Healthcare Plan” to expand tax-preferred accounts or codify Most Favored Nation deals to lower prescription drug costs.
The Council will continue to monitor implementation of these provisions, and provide updates to Council members as new information becomes available. More information on the provisions outlined above can be found in this memo from Steptoe. (Council member login required.)