Pharmacy Benefit Manager Reform Act: New Prescription Drug Cost Bill Established on National Stage, Following California’s Example

by Andy Chasin, vice president of Federal Policy and Advocacy, Blue Shield of California 

This week, federal momentum to address healthcare costs accelerated as Congress passed the Pharmacy Benefit Manager (PBM) Reform Act and the Department of Labor proposed new rules to increase transparency in PBM fees. This signaled an important shift toward the kind of openness, fairness and affordability Blue Shield of California has championed for years. 

As Paul Markovich, president and CEO of Blue Shield’s parent company Ascendiun, said at two congressional hearings around healthcare affordability this January: “We need to make prescription drugs accessible and affordable by eliminating kickbacks in the form of rebates, fees and spread pricing.”  

Blue Shield’s bold, bipartisan commitment 

Blue Shield has long pushed for a more transparent and affordable prescription drug system. This is the kind of innovation our nonprofit health plan envisioned — changes that eliminate hidden fees and inflated costs created by traditional pharmacy benefit managers (PBMs).  

In 2020, Blue Shield led the effort to bring together 18 other Blue plans to launch CivicaScript with a bold mission: to make generic medications available at one clear, consistent and affordable price. In this effort, Blue Shield engaged Gov. Gavin Newsom’s office early on, recognizing the need for strong public–private collaboration to drive meaningful change. 

The vision advanced further in 2023 with Blue Shield’s launch of Pharmacy Care Reimagined, a first-of-its-kind initiative that moves away from the traditional PBM model. By working directly with vendors across the supply chain, Blue Shield has cut out unnecessary middlemen, reduced costs and rebuilt trust between patients and pharmacists through greater transparency and fairness. 

These efforts paved the way for major statewide reform in 2025 — when California passed Senate Bill 41 (SB 41) with overwhelming bipartisan support. SB 41 became the most comprehensive PBM reform bill in the nation, curbing opaque PBM practices and setting the stage for a more patient-centered prescription drug system. The same week, Gov. Newsom also announced California’s new $11 insulin with CivicaScript — the result of a five-year partnership between the state, Blue Shield of California and CivicaScript to make prescription drugs more affordable for consumers. 

Together, these milestones laid the groundwork for change at the national level.  

The pharmacy benefit manager problem 

Historically, pharmacy benefit managers were created to lower drug costs, but they’ve instead become major cost drivers. Three PBMs now control about 80% of the market and use opaque pricing, fees and rebate structures that often favor higher-priced drugs. Rather than passing savings to consumers, PBMs frequently keep a share of the rebates — incentivizing them to prioritize expensive medication — and limiting health plans’ ability to steer members toward lower-cost or generic options. 

Research shows this system directly inflates prices — every $1 increase in rebates raises a drug’s list price by an average of $1.17. The impact of PBM incentives is clear: Humira kept 96% of its market share even after cheaper biosimilars debuted, because PBMs continued favoring it in order to capture large rebates. This dynamic drives up costs for consumers, employers and the entire healthcare system. 

Why the PBM Reform Act matters for the nation 

The PBM Reform Act’s policy change has written into action new laws that will put consumers first: 

• Full rebate pass-through to plans (commercial plans): Pharmacy benefit managers and their affiliates must forward all rebates, fees and discounts directly to health payers and therefore consumers. 

• Oversight of PBM management services (commercial plans): Pharmacy benefit managers must submit full drug-level reporting to group health plans, reporting on compensation, reimbursements, spread and rebates.  

• Modernizing and ensuring PBM accountability (Medicare): Pharmacy benefit managers are prohibited from receiving any payments other than bona fide service fees, which are not linked to drug price, rebates, drug placement or volume.  

• Pharmacy access and oversight (Medicare): Pharmacy contracts are required to be “reasonable and relevant,” and a new category of “essential retail pharmacy” has been created for pharmacies in underserved areas.