States Should Not Wait Until 2028 to Open PBMs’ Books
REALCLEARHEALTH
Prescription drug prices do not become opaque by accident. They become opaque because the middlemen who manage drug benefits are allowed to hide many of their revenue streams from the employers, insurers, pharmacies, and patients who ultimately pay the bill. Congress has already recognized the problem. Federal pharmacy benefit manager (PBM) reporting requirements are scheduled to reshape what PBMs must disclose, but many of the most important provisions will not take effect until 2028. That delay creates a basic question for state lawmakers: why wait?
PBMs claim they lower prices by negotiating discounts. But without transparency, no one can verify whether those savings are being passed through to patients or quietly absorbed as revenue. This prevents insurers, employers, and other healthcare purchasers from effectively comparing PBMs when deciding who should manage their drug benefits. According to the Federal Trade Commission, it also allows PBMs to markup the costs of critical medicines such as cancer and HIV drugs.
PBMs sit between insurers, employers, drug manufacturers, pharmacies, and patients. Their compensation is often embedded in retained manufacturer rebates, spread pricing, administrative fees, pharmacy clawbacks, and have been accused by the Federal Trade Commission of favoring high-cost drugs when larger rebates make them more profitable. Employers and insurers cannot negotiate effectively if they do not know what a PBM received, retained, charged, or paid. This is the information needed to judge whether a PBM is actually doing its job.
The federal government has moved in the right direction, but delayed implementation gives PBMs more time to operate under the same opaque model that prompted reform in the first place. States should not use the federal timeline as an excuse for inaction. They should use the upcoming reforms as a blueprint. Federal rules will require robust PBM reporting on rebates, fees, spread pricing, and compensation—the precise information needed to introduce competition into the PBM market. State governments can bring this transparency to patients, employers, and healthcare providers without waiting until 2028.
Some states are already showing what this can look like. North Carolina’s SCRIPT Act requires reporting on PBM rebates, spreads, affiliated pharmacies, pharmacy fees, and retained rebates. Kansas went further by targeting spread pricing directly, requiring PBMs to report rebate and reimbursement information, and forcing public reporting when pharmacy reimbursement significantly departs from the National Average Drug Acquisition Cost. Neither law is perfect. North Carolina keeps too much information confidential, and Kansas moves closer to reimbursement regulation than market transparency. But both states show that lawmakers do not need to wait until 2028 to start forcing PBMs to disclose where the money goes.
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