In the years-long debate over pharmacy benefit manager (PBM) legislation that culminated with landmark reform enacted in the Consolidated Appropriations Act (CAA), one policy change stands out.

It’s not increased transparency, no, PBMs were on track to give employers every bit of information requested, and more. It’s not the rebate pass-through provision because PBMs are already passing through nearly 100% of rebates to employers.

Dubbed “delinking” and sold by Big Pharma in a bag of goods to Congress, the policy is a Trojan Horse that will reap new profit windfalls for drug manufacturers on the backs of seniors paying higher premiums and taxpayers paying more to fund Medicare. It functionally means PBMs cannot be paid for performance or rewarded for how far they drive down a drug’s price in negotiations with manufacturers.

Economists warned that the policy would do nothing to lower drug costs and President Trump, in his first term, revoked this proposal because it would raise costs for America’s seniors.

The newly named HHS affordability czar, and former Chief Economist on the Council of Economic Advisers, Casey Mulligan, even developed a detailed economic model and found that “delinking” in Medicare will lead to taxpayers paying more, much higher premiums for seniors, and a financial windfall of billions of dollars for Big Pharma.

Despite efforts rooted in fact-based research of economists, health policy experts, and the PBM industry, the big drugmakers won and “delinking” in Medicare is now law.

Based on CMS’s previous rules for Part D, almost all rebates were already passed through to plan sponsors. Thus, one might think the CAA would have only a modest effect on the program. However, the legislation now gives drugmakers an upper hand on some aspects of their negotiations, because fees are also “delinked.” Fees paid by drugmakers to PBMs for specific services not tied to formulary status or coverage must now be structured as flat payments. 

Beyond this change, PBMs will also face more robust oversight, including being subject to annual audits with a six‑month compliance window and must provide an annual report to Medicare plans at no cost with comprehensive cost, coverage, and utilization data. They will also see more Congressional oversight, with new government reports on total PBM compensation.

PBM Reform is Settled Law – What Comes Next

PBM reform enacted through the CAA marks a turning point, but not the one patients were promised. While PBMs face unprecedented mandates, restrictions, and reporting requirements, drug manufacturers face no new obligations to curtail their patent abuse practices that block generics and other lower-cost drugs from entering the market.

If Congress is serious about affordability, PBM reform cannot be the final word. Policymakers must now focus on the practices that actually keep drug prices high, including patent thickets, product hopping, and strategies that delay competition long after innovation has been rewarded.

Learn how the PBM industry has been transformed: Download An Insider’s Guide to Newly Enacted PBM Reform