The House of Representatives passed the long-awaited spending bill, and it was signed by President Trump on February 3rd. From the standpoint of health care, the bill failed to extend Affordable Care Act subsidies, but remarkably, major pharmacy benefit manager (PBM) reforms survived the final version.
Meaningful PBM Reforms, Including Rebate Pass Throughs
The Consolidated Appropriations Act of 2026 seeks to delink PBM compensation from Medicare part D list prices and subsequent rebates, opting instead for flat administrative fees. This action would reduce a PBM’s incentive to favor higher priced drugs over generics and biosimilars.
Second, the bill mandates that PBMs fully pass-through rebates they negotiate from manufacturers to plans and plan sponsors. Failure to comply with the provision may result in financial penalties imposed by the Centers for Medicare and Medicaid Services (CMS).
Third, PBMs will be required to report data to payers and plan sponsors at least every six months. The reporting must include data on rebates, formulary rationale, benefit design, spread pricing, and drug spending, all of which were infrequently shared in the past. This attempt at increasing PBM transparency should shine a significant light on the advantages of biosimilar products.
The Department of Health and Human Services will next have to specify the reporting requirements and timelines for implementation.
Rebates not Eliminated, but no Longer a Direct PBM Revenue Source
These reforms have long been sought by plan sponsors. The Act’s provisions go beyond public health plans, extending into the protected realm of ERISA and self-funded plans. In a press release, Shawn Gremminger, President and CEO of the National Alliance of Healthcare Purchaser Coalitions stated, “Today’s bipartisan passage is not only a policy win—it is a long overdue correction to a system that has lacked transparency for far too long. For years, employers have navigated a healthcare marketplace where critical information about pricing, rebates, and formulary decisions were kept out of view. These reforms finally level the playing field and put employers and working families first.”
Removing the ability of PBMs to retain rebate revenue is an important step to ensuring that the PBM acts in the best interests of their clients (i.e., as a fiduciary). However, this part of the equation is not yet been fully solved.
One interesting aspect of this foundational PBM reform is the extent it might stimulate the growth of PBM’s private-label brands. With the Big 3 PBMs already committing to various degrees the move to a pass-through rebate model, they will no doubt focus their efforts on replacing dwindling rebate revenue. Can anyone else imagine a new service fee charged by the PBMs, for simply negotiating the rebate?
The private-label biosimilar is one tool in their tool box, along with new and innovative service fees. It allows the PBM to use spread pricing, like a drug manufacturer, to pocket profits. The end result is that the PBM still has a conflict of interest, in trying to maximize its own profits by dispensing its private- label biosimilar, instead of another, perhaps less-expensive biosimilar agent.
Will These PBM Reforms Necessarily Increase Biosimilar Adoption?
Unfortunately, the rebate pass-through mandate by itself will not help biosimilar uptake: Payers will not be discouraged from preferring rebate-based pricing. Yes, rebates will still be a line item on a health plan’s or sponsor’s bottom line. Therefore, biosimilars with a low WAC price may still be disadvantaged compared with the originator when formulary decisions are made.
Rebates are not paid immediately to the plans, and I don’t believe that patients will benefit at the point of sale from the delayed savings with reduced co-insurance based on the lower net cost. That is yet to be seen. However, once larger employers see the more-transparent, mandated data reports from their PBM on rebates, lower net prices of biosimilars, and the low rate of biosimilar adoption (for biosimilars covered under the pharmacy benefit), the value biosimilars truly provide will also be transparent. This should be enough to demand formulary change—or a move to a PBM acting in the best interest of their clients and beneficiaries.
This article was written by our Director of Content, Stanton Mehr. Stan is has been writing commentary and reporting news about the biosimilar industry since the submission of the first biosimilar 351(k) application to the FDA 13 years ago. Since that time, BR&R has been tracking the US biosimilar marketplace, with the industry’s original, comprehensive and updated database of biosimilar filings with the FDA.
