A summary of remarks on PBM reform and the FTC–ESI settlement by speakers at last month’s Association for Accessible Medicines’ Access 2026 conference.
The Association for Accessible Medicines’ (AAM) Access 2026 conference in Miami February 23-25 was perfectly timed to take advantage of perhaps the most important health care—related events of the year: the passage of the Consolidated Appropriation Act’s pharmacy benefit manager (PBM) reforms and the Federal Trade Commission (FTC) settlement with Express Scripts (ESI), which almost certainly will lead to agreements with the other big 3 PBMs. In two sessions at AAM, two main players in shaping PBM reform over several years discuss their reactions and expectations.
On the Long Road to PBM Rebate Changes With Scott Gottlieb
Scott Gottlieb, MD, former FDA Commissioner during the first Trump administration, was part of the effort to enact its Biosimilar Action Plan to nudge biosimilar uptake in the right direction. Another of the pro-biosimilar efforts by he and then Secretary of Health and Human Services Alex Azar was the planned removal of safe harbor protection for drug rebates. Though some of these efforts made it to the finish line, the use of drug rebates to ensure PBM profits and to disadvantage lower-priced pharmaceuticals survived their attempts. At the AAM conference in Miami last week, Dr. Gottlieb restated, “If there was ever PBM actions that can prove their anticompetitiveness, this is it!”
Dr. Gottlieb believes that “you can take the entire construct we made, tailor it to just these circumstances today. The cost of implementing the rule [to remove the rebate safe harbor] will save money in this narrow biosimilar application.”
Lacking that, he still believes that the settlement between the FTC and ESI “was profound. The issues of the rebates flowing back to consumers, the writing’s on the wall. A lot of the changes are happening absent legislation action.” However, he believes that with the reforms achieved through the Consolidated Appropriations Act of 2026 and the FTC–ESI settlement, “additional PBM reform is unlikely, though we may not have gone far enough,” said Dr. Gottlieb. Still, he believes that CMS can take additional action, in the way it directs companies to design formularies.
ERISA Employers Can Celebrate Freer PBM Markets
A jubilant James Gelfand, JD, President and CEO, The ERISA Industry Committee (ERIC), exclaimed, “We won! We’ve forced transparency on the PBMs, forced pass-through rebates, and we’re ready to celebrate. This will make it very hard for PBMs to make money on arbitrage. We think it’s transformative.”
Mr. Gelfand noted that Congress is still considering additional changes, one of which is to address the request-for-proposal process. This is necessary because of the cozy relationship between the big PBMs and the employer benefit consultants and brokers. “If the PBMs are in cahoots with the brokerage/consulting companies to keep their business, it will make it very hard for these other PBMs to come in with innovative models and to apply fiduciary standards,” he said.
The PBMs have said that employers love rebates, according to Mr. Gelfand, saying they go to the company’s bottom line. ERISA rules prohibit this: “We can’t use the rebates for anything but to reduce healthcare costs.”
After these reforms are applied, 98% of our employer members still see a role for PBMs, he said. “We don’t want to get into the PBM business.”
Free markets need competition, information, and choice. The rebate pass-through provision is the most important of the reforms. His organization, ERIC, has been advocating for PBMs for many years. Mr. Gelfand remarked, in the Consolidated Appropriations Act of 2021, “we got a provision in place that aimed at revealing the compensation of the vendors that work for employers in employer-sponsored health benefit plans. The Department of Labor interpreted that to mean just brokers and consultants. But from the beginning, we had intended this to also include PBMs. Legislators sent letters to the Department of Labor, telling them they forgot to include PBMs. It took another 5 years to get this changed.”
PBMs and Employer Benefit Consultants: Only a Minor Conflict of Interest?
Employers take advice from consultants and brokers, who help them choose their PBM. They help them decide whether they should be part of a purchasing collaborative, or whether they should contract directly with pharmaceutical companies. “Yet, these third parties are getting paid by the PBM, which makes it not very reliable advice,” asserted Mr. Gelfand. “And we have the same issue with the PBM who tells us, ‘Trust us, you want to go with the AbbVie drug, it’s been out for years, it’s reliable, and the rebate is awesome!’ If I ask them how much of a rebate they receive, they say, ‘We’re not going to tell you that. It’s not important.’”
The Department of Labor will have to unravel the gordian knot of how PBMs profit, opening the employer’s eyes to how PBMs are earning their money. “Employers pay 75 cents out of every health care dollar, so it’s a big deal if we’re being steered towards the higher-priced product. We’ve been ‘trusting’ the PBMs for decades that we’ve been getting the lowest net-cost drugs. But it can’t be explained to us exactly how it’s the lowest net-cost product.”
Instead, the PBM responds, “You have to look across the entire book of business, because having this drug and its bundled rebate is complicated and can’t be easily explained to you.” Mr. Gelfand believes it may be 18 months before a final rule is released by the Department of Labor, but “all that is going to be over.”
We can’t effectively legislate against specific behaviors of the PBM (like spread pricing or rebates) because of the time it takes to pass a Congressional proposal. “The PBMs have very smart people and will always be a step ahead of us, and maybe three steps ahead of Congress because they are so slow to act,” said Mr. Gelfand. “Fundamentally, you can’t just keep going after these rifle shots to legislate their behavior. You must legislate a new business model or paradigm, or they will find ways to get around it. That’s why we think PBMs should be fiduciaries. As a fiduciary, you cannot just invent new ways to cheat your customer. Under ERISA, fiduciaries cannot waste money under the plan, and they must make decisions that are prudent and in the best interests of the beneficiaries of that plan. There’s no way to fit these nasty arbitrage tricks under these two rules. Unfortunately, we’re probably years away from getting this done.”
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.
