TOP STORIES

Policy PBM reform law delinks Part D compensation from rebates—the largest structural change to pharmacy benefit economics since Medicare Part D launched

The Consolidated Appropriations Act of 2026 was signed into law on February 3 after passing the Senate 71-29 on January 30. The legislation prohibits PBM compensation under Medicare Part D from being tied to drug list prices, rebate percentages, or formulary placement decisions, with an effective date of 2028. As Sidley Austin analysis noted, the law requires PBMs to fully pass through manufacturer rebates to PDP sponsors and mandates semiannual data reports to larger plans (100+ employees) covering compensation flows, rebate amounts, and rationale for formulary placement on drugs exceeding $10,000 in gross spending. The major PBMs have already begun adapting: Express Scripts is migrating toward rebate pass-through, and Optum Rx committed to full rebate pass-through effective January 2026.

Competitive implications: CVS Health (Caremark), Cigna (Express Scripts), and UnitedHealth (Optum Rx) face the most significant business model disruption. Their private-label biosimilar strategies—Cordavis, Quallent, and Nuvaila respectively—may gain relative importance as a replacement margin source. Smaller PBMs like Navitus and MedImpact, which already operated closer to pass-through models, gain competitive positioning. Manufacturers with high list-price/high-rebate contracting strategies face potential repricing pressure across their Part D portfolios as the rebate channel tightens.

Key risks: The law does not address commercial insurance PBM practices, creating a two-tier system that may complicate formulary management. Congress would need to pass additional legislation to extend transparency requirements to employer-sponsored plans, and AJMC reporting suggests that political will for commercial PBM reform exists but faces stronger industry opposition.

340B Federal court vacates 340B Rebate Pilot, forcing HHS back to the drawing board on program architecture

The U.S. District Court for the District of Maine vacated the 340B Rebate Model Pilot Program on February 10, siding with the American Hospital Association in ruling that HHS exceeded its statutory authority. The decision invalidated manufacturer applications approved between October 30 and November 14, 2025, and remanded the program to HHS for reconsideration. HRSA has responded by issuing a Request for Information with an April 20, 2026 deadline, seeking input on whether rebates can legally replace upfront discounts as the mechanism for effectuating ceiling prices. The AHA characterized the ruling as a major victory for safety-net hospitals, while PhRMA has continued to push for alternative program structures.

Competitive implications: Safety-net hospitals and FQHCs retain the upfront discount model that generated $81 billion in 340B purchases in 2024, per Drug Channels Institute analysis. Contract pharmacies affiliated with the Big Three PBMs retain significant 340B revenue flows—73% of the 160,000 contract pharmacy relationships are held by CVS, Walgreens, Walmart, Express Scripts, and Optum. Specialty pharmacies operating outside 340B networks face continued competitive disadvantage on pricing for covered entity patient populations.

ICER Cytisinicline value assessment sets $1,900-$2,700 price benchmark—a test case for launch pricing discipline in a cost-sensitive category

ICER published its final evidence report on cytisinicline (Achieve Life Sciences) for smoking cessation on February 12, concluding that the drug offers similar efficacy to varenicline (Chantix) with fewer gastrointestinal side effects. The independent appraisal committee found cytisinicline provides net health benefit when used alone, but evidence was insufficient to assess the comparative benefit versus varenicline plus combination NRT. ICER set a health benefit price benchmark of $1,900-$2,700 per year, noting the FDA action date is June 2026 and no US price has been announced. ICER CMO David Rind stated that manufacturer pricing decisions would substantially affect accessibility for the 28 million American smokers.

FORMULARY & COVERAGE

• Formulary Express Scripts removed brand Stelara from its 2026 national preferred formulary, completing the SC removal by July 2026. Alternatives include Selarsdi, Quallent-branded ustekinumab, and Yesintek. Brand Actemra and Soliris also replaced by biosimilars Tyenne and Epysqli respectively—the most aggressive specialty biosimilar transition in a single formulary cycle.
• Formulary PSG analysis found the financial impact of Express Scripts’ 2026 exclusions is more than double that of 2025, with diabetes seeing the largest hit from removal of One Touch supplies and Humalog vials, and specialty categories driven by biosimilar-for-brand swaps across inflammatory and hematology portfolios.
• Biosimilar MedImpact added Selarsdi (85% discount to Stelara) and Yesintek (90% discount) to formularies at parity with brand Stelara, maintaining a pharmacy-neutral approach while Biocon Biologics reports productive discussions with additional payers for Yesintek formulary additions through April.
• Pricing DLA Piper analysis found that 2026 IRA maximum fair prices are reducing beneficiary cost-sharing for the 10 negotiated drugs, but only 11% of Part D beneficiaries without low-income subsidy and in co-insurance plans will see lower per-prescription costs—and 52% of those are in plans with increased premiums that may offset savings.

PRICING & REIMBURSEMENT

• Pricing ICER draft evidence report on GLP-1 obesity treatments confirmed cost-effectiveness of Zepbound ($53,400/QALY), injectable Wegovy ($61,400/QALY), and oral Wegovy ($69,300/QALY)—but projected that fewer than 1% of eligible US adults can access treatment at current net prices before exceeding the $821M budget impact threshold. The stark access gap between clinical value and population affordability remains the defining market access challenge for the GLP-1 category.
• Pricing CMS Medicare Drug Price Negotiation Cycle 2 is underway for 15 Part D and Part B drugs for price applicability year 2027. ICER is separately developing a special assessment on vedolizumab (Entyvio) for CMS as part of the 2026 public comment process for price applicability year 2028, signaling that high-spend inflammatory disease biologics are firmly in the negotiation pipeline.
• Pricing Stelara IRA Maximum Fair Price takes effect in 2026 at 66% below its 2023 list price. The collision between government-set pricing and PBM private-label biosimilar strategies creates unprecedented competitive dynamics: Drug Channels questions whether CMS will implement the MFP given that nine biosimilars plus one unbranded biologic now compete in the market, with list price discounts ranging from 5% to 90%.

POLICY & REGULATORY

• Policy Trump MFN drug pricing proposal faces bipartisan headwinds despite cross-administration continuity on international reference pricing ambitions. PhRMA leadership has pivoted messaging to push PBM and 340B reform as alternatives to government price-setting, arguing that intermediary margin extraction—not manufacturer pricing—drives patient cost exposure.
• Policy Trump 2026 budget proposes moving 340B from HRSA to CMS oversight—a structural shift that would place the program under the same agency administering Medicare drug negotiation, potentially creating coordinated pricing pressure across both channels simultaneously.
• Policy State 340B contract pharmacy access laws continue to expand: Hawaii, Colorado, Vermont, and Oklahoma have enacted new protections, with Washington introducing the first 2026 bill. 340B Report tracking shows AbbVie has sued to block Hawaii’s law while Vertex has taken a conciliatory approach, automatically exempting states as new laws take effect.
• Policy FDA Commissioner Makary stated he believes most prescription drugs should be available OTC unless unsafe, addictive, or requiring monitoring—a position that could accelerate Rx-to-OTC switches for established drugs and compress branded margins while expanding market size in therapeutic categories where access is the primary commercial constraint.

WHAT TO WATCH NEXT

PBM transparency compliance timelines—2027 plan design cycle begins now

The CAA 2026 takes effect in 2028, but payer and PBM responses will materialize in 2027 plan design negotiations beginning this fall. Large employers (100+ lives) should expect their PBMs to begin offering semiannual reporting packages voluntarily ahead of mandate to retain accounts. Express Scripts’ existing rebate pass-through commitment and Optum Rx’s January 2026 implementation provide competitive templates. Market access teams at pharmaceutical manufacturers should track whether PBMs shift formulary exclusion criteria from rebate-driven to net-cost-driven models during the transition period—a change that would fundamentally alter launch pricing strategy for new specialty drugs entering the market in 2027-2028.

340B RFI deadline: April 20, 2026

HRSA’s RFI on the 340B Rebate Model represents a critical opportunity for all stakeholders to shape the next iteration of program reform. With the D.C. Circuit case still pending and the proposed HRSA-to-CMS transfer in the Trump budget, the 340B landscape could look materially different by year-end. Covered entities, manufacturers, contract pharmacies, and patient advocacy groups should submit comments by the April 20 deadline. The RFI specifically asks whether rebates can legally effectuate ceiling prices under existing statutory authority—a question the Maine court answered in the negative but that HHS may attempt to address through revised regulatory frameworks.

ICER obesity treatments final report and cytisinicline PDUFA

ICER’s obesity treatment final report will follow public deliberation later in 2026, with pricing recommendations that could anchor payer expectations for GLP-1 coverage policy at a time when oral formulations are entering the market. The cytisinicline PDUFA date in June 2026 will test whether a new entrant can launch within ICER’s price benchmark in a preventive health category where coverage mandates exist but utilization management is common.

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