Upcoming pharmacy benefit regulations could disrupt PBM Contracts, rebates, and drug costs. Here’s what employers and brokers need to know
Key takeaways
- New laws in 2025–2026 require PBMs to pass 100% of rebates to employers and disclose all fees.
- 24 states passed 33 PBM reform bills in 2024, increasing transparency rules nationwide.
- The top 3 PBMs control 80% of the market, driving the push for stricter oversight.
- Employers must review PBM contracts to stay compliant and capture full savings.
- Intercept Rx delivers transparency, compliance, and major cost savings.
Introduction
The pharmacy benefits industry is about to experience some of the biggest regulatory changes in years. New laws at both the federal and state levels are targeting pharmacy benefit managers (PBMs), aiming to improve transparency, control drug prices, and pass more savings directly to employers and employees.
For employers, especially those offering self-funded and level-funded health plans, these changes could impact how prescription drug benefits are managed and how much they cost. Brokers also need to stay ahead, as these new rules may affect PBM contracts, rebate structures, and overall plan design.
Intercept Rx, a Pharmacy Benefit Solutions provider based in Alabama but serving companies nationwide, is helping employers navigate this changing landscape. With a focus on transparency, savings, and compliance, Intercept Rx is built to help businesses adapt to these new rules while delivering lower costs and better outcomes for employees.
In this article, we’ll break down the key legislative changes coming in 2025 and 2026 and what brokers and employers need to do now to stay ahead.
Federal PBM reform: What’s changing in 2025 and 2026 for pharmacy benefits
Several major changes are happening at the federal level that directly impact pharmacy benefits, PBMs, and employer-sponsored health plans. New regulations are focused on improving transparency, reducing drug costs, and making sure that savings from prescription drug rebates go back to employers and their employees.
Executive orders on drug pricing
In 2025, former President Trump announced a new executive order aimed at lowering drug prices in the U.S. This order ties the cost of certain prescription drugs to the lower prices paid in other developed countries. This pricing strategy, known as the “Most Favored Nation” rule, could potentially reduce costs on some medications by up to 80%.¹
If fully implemented, this change would force drug manufacturers to offer better pricing in the U.S. market, impacting how PBMs negotiate costs and how much employers pay for medications.
New transparency requirements under ERISA
A key part of the new legislation focuses on transparency in PBM contracts. Under updated ERISA rules, PBMs are now required to fully disclose all direct and indirect compensation, including fees, rebates, and spread pricing.
This means employers will now be able to see exactly how much their PBM earns from each prescription transaction. This change helps employers and brokers better evaluate whether their PBM partner is truly passing on savings or profiting in ways that were previously hidden.
Rebate pass-through requirements
One of the most impactful federal changes is the new rule requiring that 100% of prescription drug rebates must be passed directly to employer health plans. Previously, PBMs could retain some or all of these rebates, creating a lack of transparency and reducing potential savings for employers.
Now, rebates from drug manufacturers must flow straight to the employer or health plan sponsor helping to lower overall healthcare costs or reduce premiums for employees. This change is a major win for self-funded and level-funded employers, as it ensures they receive the full benefit of manufacturer rebates without any hidden deductions.
Why this matters
These federal reforms are designed to improve fairness in the pharmacy benefit industry. For employers and brokers, this means it’s more important than ever to review PBM contracts carefully, look for transparent partners, and make sure they are receiving the savings they deserve.
PBM regulations by State: Why local pharmacy benefit laws matter nationally
While Intercept Rx is based in Alabama, the company serves self-funded and level-funded employers nationwide. That’s why understanding state-level pharmacy benefit laws is so important. In recent years, more states are passing laws to regulate pharmacy benefit managers (PBMs). These changes are designed to increase transparency, protect consumers, and lower prescription costs.²
Even if an employer is located in one state, laws in other states can have national ripple effects, especially for companies with employees or operations in multiple states. Brokers also need to stay aware, since these rules may change how PBM contracts are written and managed.
-
📍 Arkansas leads the way
Arkansas was one of the first states to challenge PBM practices. A landmark law prevents PBMs from forcing patients to use certain pharmacies, especially those owned by the PBM itself. This law sparked legal battles but has set an example for other states looking to reduce PBM control over pharmacy choices.
-
📍 Massachusetts sets new standards
Starting January 1, 2026, Massachusetts will require all PBMs to be officially licensed in the state. They must also submit detailed rebate reports every year, showing exactly how much money is being collected and where it goes. This rule is designed to make sure PBMs are operating transparently and fairly.
-
📍 California pushes for full rebate transparency
California is proposing some of the toughest PBM regulations in the country. One bill requires PBMs to pass 100% of manufacturer rebates directly to health plans and employers. If passed, this would set a new standard for rebate transparency and could influence legislation in other states.
Why it matters everywhere
Even if a company doesn’t operate in these specific states, state-level PBM laws often influence federal regulations and best practices nationwide. Employers with teams spread across multiple states may face different rules in each one. This can impact PBM contracts, rebate structures, and compliance requirements.
Brokers and employers must stay up to date with these changes to protect their clients and ensure they are getting the maximum savings and legal protections available.
What employers and brokers must do to stay compliant with new PBM rules
The new pharmacy benefit laws coming in 2025 and 2026 will directly affect how employers and brokers manage prescription drug benefits. These rules are not just technical changes, they will have a real impact on contracts, costs, and business strategies.
Here’s what brokers and employers need to consider moving forward:
Contractual adjustments are a must
The days of vague and confusing PBM contracts are coming to an end. With new federal and state laws focusing on rebate transparency and fee disclosure, employers will need to review and revise their PBM contracts.
Contracts should now clearly outline:
- How rebates are handled
- What fees the PBM is charging (both direct and indirect)
- How pricing is structured (including spread pricing rules)
Failing to update contracts could lead to compliance issues or missed savings opportunities.
Financial impact on employers
These regulations may change the flow of money in pharmacy benefits. For example:
- Employers will now receive 100% of manufacturer rebates (a big win).
- Some PBMs may introduce new administrative fees to replace lost rebate profits.
- Employers could see lower drug costs but should be prepared for contract renegotiations.
Understanding how these financial shifts work is key to making the most out of the new laws.
Strategic planning is more important than ever
This is the perfect time for brokers and employers to step back and ask:
- Is our current PBM fully transparent?
- Are we capturing all the savings available?
- Are our contracts aligned with the new regulations?
Working with a transparent Pharmacy Benefit Solutions provider, like Intercept Rx, can make this process easier. Intercept Rx is already designed to follow these new transparency standards while delivering real savings.
In short, this is a major opportunity for brokers and employers to improve how they manage pharmacy benefits, reduce costs, and offer better plans to employees, all while staying compliant.
How Intercept Rx’s Pharmacy Benefit Solutions meet 2025 PBM requirements
As pharmacy benefit laws evolve, Intercept Rx continues to lead with a solution that fits perfectly into this new landscape.
Benefits for self-funded and level-funded companies
For businesses offering self-funded or level-funded health plans, Intercept Rx delivers several key benefits:
- Lower pharmacy costs: Employers capture full rebates and real discounts.
- Regulatory compliance: Contracts are already aligned with the newest PBM laws.
- Improved plan value: Employers can offer better benefits to employees without raising costs.
- Full transparency: Employers and brokers know exactly what they’re paying for and what they’re saving.
Proven results: Real savings, real success
Many companies across the country have already switched to Intercept Rx’s Rx Optimization Program and are seeing the results:
- Some clients have reduced pharmacy costs by 20% to 40% within the first year.
- Employers report improved employee satisfaction, thanks to better medication access and lower out-of-pocket costs.
- One client with a self-funded plan shared that after switching, they uncovered hidden fees they never knew existed with their prior PBM and now save hundreds of thousands of dollars annually.
👉 Read more about how Intercept Rx delivers savings in this press release: Intercept Rx Announces Enhanced Savings Through Innovative Rx Optimization Program
This program isn’t just about following the new rules, it’s about helping employers and brokers stay ahead, save money, and provide better pharmacy benefits for employees.
Conclusion: The future of pharmacy benefits is transparent. Are you ready?
The pharmacy benefits industry is changing fast. With new federal and state laws taking effect in 2025 and 2026, employers and brokers must adapt to a world where transparency is no longer optional, it’s required.
At the federal level, new rules are forcing PBMs to:
- Disclose all fees and payments under ERISA.
- Pass 100% of prescription drug rebates directly to employers.
- Follow pricing models tied to international drug prices, which could lower costs by up to 80% on some medications.
At the same time, states are stepping in to strengthen oversight. In fact, in 2024 alone, 24 states passed 33 new laws regulating PBMs, showing just how serious this shift is. From rebate transparency in California and Massachusetts to anti-steering laws in Arkansas, the landscape is changing for everyone.
These reforms are critical when you consider that just three PBMs control around 80% of the U.S. prescription drug market.³ This market dominance is exactly why lawmakers are demanding more accountability and why employers can no longer afford to stay with PBMs that operate in the shadows.
The solution is clear
This is a huge opportunity for brokers and employers offering self-funded or level-funded health plans. By partnering with a transparent, solutions-driven PBM like Intercept Rx, businesses can stay compliant, reduce pharmacy costs, and deliver better benefits to their employees.
The Rx Optimization Program from Intercept Rx is built for this moment helping companies nationwide navigate the new rules while maximizing savings.
Take action today
Brokers and employers should not wait for these laws to fully take effect. The time to act is now. Review your PBM contracts, demand full transparency, and switch to a program that works for your company, not for hidden middlemen.
➡️ Learn more about how Intercept Rx can help your business save money, stay compliant, and improve pharmacy benefits at intercept.health.
