The PBM Black Box Gets a Window (Sort Of)
For anyone who has ever stared at a pharmacy receipt and wondered how the price for a drug was calculated, the answer has always been: nobody really knows. That's not hyperbole. The U.S. prescription drug supply chain operates through pharmacy benefit managers (PBMs), and their financial arrangements with drug manufacturers have, until very recently, been about as transparent as a black box locked inside another black box, both labelled ‘proprietary’. In the span of roughly one week at the end of January and start of February 2026, the federal government made three separate moves to pry that cabinet open.First, Congress passed and the President signed the Consolidated Appropriations Act (CAA) of 2026, which includes significant new transparency requirements for PBMs, which cuts the direct link between PBM pay and drug prices in Medicare Part D — meaning PBMs can no longer earn more simply by favouring expensive drugs on their formularies. Second, the Department of Labor issued a proposed rule titled "Improving Transparency into Pharmacy Benefit Manager Fee Disclosure," requiring PBMs to report how they make money from self-insured employer health plans — including rebates received from manufacturers, spread pricing revenues, and net drug costs. Third, the FTC announced a settlement with Express Scripts, one of the country's largest PBMs, resolving allegations that it inflated insulin costs by pushing manufacturers to compete for formulary placement based on the size of rebates off the list price rather than net price, with Express Scripts keeping a portion of those inflated rebates.
So what does it actually mean? Rebate delinking i.e the centrepiece of the CAA reforms, attacks the core incentive problem. Under the old model, PBMs were financially rewarded for putting higher-list-price drugs on formularies.
Bigger list prices = bigger rebates = bigger cuts for PBMs.
By requiring PBMs to receive flat administrative fees instead of rebate-linked compensation, and mandating 100% pass-through of rebates to payers, the legislation removes the carrot at the end of the stick that previously encouraged favouring expensive drugs over cheaper equivalents.
As you can imagine, the industry was already watching this coming and has been repositioning accordingly: partly to get ahead of regulation, partly to look cooperative. Major PBMs like Optum Rx, CVS Health, and Cigna are already migrating toward rebate pass-through models. The concern here is that lost revenue gets quietly recaptured through the raising of ‘flat’ (can we still call them that?) administrative fees.
The Express Scripts settlement is the more immediately interesting story. As part of the settlement, Express Scripts agreed to:
End formulary preference for higher list-price drugs when lower-cost equivalents are available
End base member cost-sharing on net prices: currently, some patients pay co-pays calculated against the inflated list price rather than the lower net price, this commits Express Scripts to using the actual negotiated price as the basis for what patients owe.
Delink manufacturer fees from list prices
One settlement applying to one company is far from systemic reform, but given that three major PBMs control roughly 80% of the US market, it's a useful template for what regulators expect to see and what they'll be watching for.
CMS ACCESS: Value-Based Care Finally Gets a Name Tag
Value-Based Care (VBC) has been healthcare's running joke for going on two decades. At every industry event, some panel would announce that "the shift from volume to value" was imminent. Then everyone would collect their tote bags and go home, and fee-for-service would continue being fee-for-service. It's worth noting, with appropriate scepticism but genuine interest, that the CMS Innovation Center announced the ACCESS (Advancing Chronic Care with Effective, Scalable Solutions) Model on December 1, 2025. This is a 10-year voluntary program that does something no major Medicare initiative has done before: it pays providers based on whether patients actually get healthier. We’re talking outcomes, people.
ACCESS focuses on conditions affecting more than two-thirds of people with Medicare, including high blood pressure, diabetes, chronic musculoskeletal pain, and depression. It introduces Outcome-Aligned Payments: recurring payments for managing patients' qualifying conditions, with full payment tied to achieving measurable health outcomes. Think of a patient’s blood pressure dropping, or their symptoms improving in a measurable way. Not process, not paperwork. Did the patient’s health actually change? It sounds obvious, but it's a meaningful departure from a system built around sick care — where the incentive has historically been to treat the presenting condition, not to keep the patient healthy enough to avoid needing treatment in the first place. The downstream cost of that model is visible in every chronic disease statistic in the US: conditions that are manageable if caught early become expensive, life-limiting, and system-consuming when they aren't.
More than 150 organizations have been provisionally approved to participate, most of which have not previously served Medicare beneficiaries — suggesting this is genuinely opening a new lane rather than reshuffling existing players. Despite the volume of interest, there’s some notable absentees from the list, namely: Oura, Hinge Health, Sword Health, Apple.
Running alongside it is the FDA's Technology-Enabled Meaningful Patient Outcomes (TEMPO) pilot, through which manufacturers of digital health devices not yet FDA-authorized can apply for enforcement discretion, allowing their devices to be used within the ACCESS framework while generating real-world performance data. Translated: CMS gets a chronic disease management model, FDA gets a real-world evidence engine, and digital health companies get a Medicare reimbursement pathway. It’s a coherent and well intentioned package of incentives.
Enough with the positivity though - outcome-based payments for chronic conditions runs headlong into the social determinants of health (SDOH) problem that has quietly torpedoed more than a few well-intentioned programmes. You can prescribe the best medication and design the perfect care plan, but your patient might still eat a poor diet due to difficulties obtaining and preparing healthy food, forget to refill prescriptions, and miss follow-up appointments because they don't have reliable transportation. Paying providers for outcomes they can’t fully control risks pushing organisations toward patients who are most likely to hit targets anyway.
The counterargument is that ACCESS has anticipated this, calibrating outcomes relative to each patient's starting point rather than against a static benchmark. Whether that adjustment is sophisticated enough to be fair in practice is something ten years of model data will eventually tell us. For now, the volume of applicants suggests the digital health sector, at least, believes this time might be different, and that there’s a lot of players that believe they have both the tech and relationship positioning to make good on their outcome-aligned ambitions.
