The Consolidated Appropriations Act of 2026

The Consolidated Appropriations Act, signed in February 2026, carries significant implications for the U.S. pharmaceutical industry. It created reforms to pharmacy benefit manager, PBM, programs and the prescription drug market. The act, H.R. 7148, is a broad government spending package, and key health policy provisions reshape how drugs are priced, how intermediaries operate, and how manufacturers interact with payers and patients.¹ The changes represent potentially consequential federal health policy adjustments for drug pricing and distribution. 

A central focus of the act within the pharmaceutical industry is reforming the role of PBMs, which negotiate drug prices on behalf of insurers and often receive rebates or fees from manufacturers. The legislation prohibits PBMs from earning compensation tied to drug prices, rebates, or volume-based incentives when contracting with Medicare Part D plans. The act requires that PBMs be paid flat “bona fide service fees.”² The act also requires that PBMs send 100 % of rebates, discounts, and other remuneration received from drug manufacturers to the health plans they serve.² This pass-through stipulation applies to both Medicare Part D prescription drug plans and private employer health plans. The law aims to ensure that negotiated savings benefit the plan sponsor and decrease incentives that historically have linked PBM revenue to higher drug list prices.

In addition to changing compensation structures, the act imposes transparency and reporting requirements on PBMs. PBMs must submit detailed annual reports to plan sponsors and the Centers for Medicare & Medicaid Services (CMS) on drug-level data, rebates, reimbursement rates, and related financial arrangements.² The disclosure requirements aim to increase transparency on pricing practices that influence how manufacturers negotiate and position their products on formularies.

The shift from rebate-based to service-fee-based PBM compensation may reduce the amount of high list prices that have been utilized to generate larger rebate pools.³ As PBMs can no longer benefit from price-linked incentives, pricing strategies from manufacturers, especially with high-cost specialty drugs, may continue to evolve and adapt to the regulation. This could influence how drugs are launched and priced across commercial and Medicare markets. The act also authorizes CMS and the Department of Health and Human Services (HHS) to exercise enhanced oversight over PBM compensation and contractual arrangements with manufacturers and plan sponsors. The regulatory authority includes review of remuneration arrangements and enforcement of compliance with new transparency and fee-structure rules.⁴ Manufacturers must monitor forthcoming CMS guidance closely because regulatory interpretation will shape how these reforms play out in clinical and commercial settings.

The overarching goal of many provisions in the Act is to reduce drug spending inefficiencies that contribute to higher patient out-of-pocket costs, particularly for Medicare Part D beneficiaries.⁵ By separating the link between PBM revenue and drug list prices, the reforms may lower the cost burden on patients. This is an important consideration for not only patients but also pharmaceutical manufacturers when developing patient assistance programs, pricing support strategy, payer engagement strategy, formulary access strategy, evaluations of rebate contracts, forecasting models, and PBM contracting models. 

While many of the act’s reforms take effect in 2028 and 2029, the act represents a long-term shift in how the U.S. government seeks to balance drug pricing control with competitive markets. For the pharmaceutical industry, this means a sustained period of policy monitoring, commercial model adjustments, and potential innovation in pricing and access solutions. The full effects will unfold as rules are implemented and plan sponsors and PBMs adapt to new regulations. Overall, the Consolidated Appropriations Act represents a very important event for U.S. prescription drug policy by fundamentally changing the role of PBMs and emphasizing transparency, fair compensation, and patient-focused outcomes. While not directly amending drug patent or Medicare price negotiation laws, its provisions may change how drug manufacturers engage with intermediaries and payers. Downstream implications for pricing strategies, market access, and the broader pharmaceutical supply chain. As these reforms take effect, the pharmaceutical industry may need to evolve its commercial strategy to adapt to and succeed in a changing drug pricing environment.

Below is a table of key reforms from H.R. 7148 to keep in mind as the pharmaceutical industry continues to evolve:^1,2,3,4,5

References:

1. 119th Congress. House - Appropriations; Budget; Ways and Means. H.R.7148 - Consolidated Appropriations Act. 2026.
2. Crowell & Moring LLP. Consolidated Appropriations Act Introduces Sweeping Reforms for Pharmacy Benefit Managers. 2026.
3. McNulty R. The American Journal of Managed Care, AJMC. 5 Policy Goals Driving PBM Reform Efforts. 2026.
4. Buchanan Ingersoll & Rooney PC. Sweeping PBM Reforms Arrive: What the 2026 Federal Legislation Means for Pharmacies, Patients and Employers. 2026.
5. McCrear S. The American Journal of Managed Care, AJMC. PBM Reforms Signed Into Law, Reshaping Medicare Part D Drug Pricing Transparency. 2026.

*Information presented on RxTeach does not represent the opinion of any specific company, organization, or team other than the authors themselves. No patient-provider relationship is created.