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The Centers for Medicare & Medicaid Services (CMS) has taken another significant step toward implementing federal pharmacy benefit manager (PBM) reform.
In a recently issued request for stakeholder feedback, CMS is seeking input on key provisions of the Medicare Part D PBM reforms enacted earlier this year, including the upcoming “delinking” requirements and new PBM data reporting obligations scheduled to take effect in 2028.
While the formal implementation date remains several years away, the questions CMS is asking today provide valuable insight into where federal regulators may be headed tomorrow. For pharmacies, PBMs, Medicare Part D plan sponsors and healthcare investors, now is the time to engage.
What Is PBM Delinking?
At its core, delinking is intended to separate PBM compensation from the list price of prescription drugs.
For years, policymakers have expressed concerns that certain PBM compensation models may create incentives that are tied to higher drug prices. The new federal framework seeks to address those concerns by limiting compensation structures that fluctuate based on a drug’s list price and instead moving toward service-based compensation arrangements.
Although the concept sounds straightforward, the details are anything but.
CMS is now seeking stakeholder input on several foundational questions, including:
- What services should qualify as PBM services?
- What constitutes a “related service” under the statute?
- Which affiliated entities should be included within the reporting framework?
- How should regulators determine whether a service fee represents fair market value?
- How should vertical integration within the PBM industry factor into that analysis?
The answers to these questions could have a substantial impact on how PBMs structure contracts, how affiliated entities are treated and how revenue streams are evaluated in the future.
The Affiliate Question May Be More Significant Than It Appears
One of the most noteworthy aspects of CMS’s request is its focus on PBM affiliates.
CMS specifically seeks feedback regarding entities that may participate in PBM functions through affiliated structures, including third-party administrators, rebate aggregators and related organizations.
This issue is particularly important given the increasing scrutiny surrounding vertically integrated healthcare enterprises. Depending on how CMS ultimately defines and regulates affiliated entities, future reporting requirements could extend well beyond the PBM entity itself and reach related organizations involved in rebate administration, contracting or other pharmacy benefit activities which is regulation that has been called for several years now, especially in light of recent FTC investigations.
New Reporting Requirements Could Create Unprecedented Transparency
The second major component of the upcoming reforms involves expanded reporting obligations.
Beginning in 2028, PBMs will be required to provide annual reports containing detailed information regarding drug utilization, pricing, pharmacy reimbursement, enrollee cost-sharing, direct and indirect remuneration, overall plan spending and revenue retained by PBMs and their affiliates.
From a policy perspective, the objective is clear: increase transparency regarding the flow of prescription drug dollars throughout the Medicare Part D ecosystem.
Whether these reporting requirements ultimately drive meaningful market changes remains to be seen. However, they will almost certainly provide regulators with significantly greater visibility into PBM operations than exists today.
That increased transparency could, in turn, fuel future legislative, regulatory and enforcement initiatives.
Why Independent Pharmacies Should Be Paying Attention
Independent pharmacies have spent years advocating for greater transparency in PBM reimbursement practices and fee structures.
While much of the public discussion surrounding PBM reform has focused on rebates and manufacturer relationships, the reporting requirements currently under development could shed additional light on pharmacy reimbursement methodologies, retained revenue and financial flows within vertically integrated organizations.
As CMS develops these rules, pharmacy stakeholders have a unique opportunity to help shape the framework before it becomes final.
Organizations that wait until the regulations are finalized may find themselves reacting to requirements that have already been largely determined.
Looking Ahead
The most important takeaway from CMS’s latest announcement is not what has already been decided—it’s what has not.
CMS is actively seeking stakeholder feedback on some of the most critical concepts underlying the new PBM reform law. Those comments will help influence how the agency drafts regulations that may reshape Medicare Part D contracting, compensation, reporting and oversight for years to come.
For pharmacies, plan sponsors, and healthcare organizations, this is not simply another regulatory notice. It is an opportunity to influence the rules before they are written.
The stakeholders that engage now will be better positioned to understand, anticipate and prepare for the next generation of federal PBM regulation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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