National PBM Reforms Enacted in 2026: What Independent Pharmacies Need to Know

On February 3, 2026, US President Donald Trump signed landmark pharmacy benefit manager (PBM) reform legislation into law as part of the Consolidated Appropriations Act of 2026 (CAA), a $1.2 trillion federal funding package enacted to end the partial government shutdown. 

After years of advocacy by independent pharmacies, pharmacy associations, and other stakeholders, these reforms represent a meaningful victory for independent pharmacies and Medicaid beneficiaries. The new PBM regulations are intended to increase transparency in drug pricing, curb anticompetitive PBM practices, improve pharmacy access, and protect patient access to medically necessary pharmacy services.¹

Why Federal PBM Reform Is a Major Victory for Independent Pharmacies

Independent pharmacies have long raised concerns about unfair reimbursement practices, exclusionary network designs, and opaque drug pricing structures imposed by PBMs.

In 2025, the US House of Representatives advanced PBM reform legislation as part of the One Big Beautiful Bill Act (OBBBA), but those provisions were removed from the Senate version that was ultimately enacted. The PBM reforms included in the CAA draw heavily from the PBM Reform Act introduced on July 10, 2025, reflecting bipartisan momentum to address PBM practices that have placed sustained financial pressure on independent pharmacies.

For independent and non-PBM-affiliated pharmacies, these reforms represent a meaningful step toward leveling the playing field and restoring fair competition within Medicare Part D.

Key PBM Reform Provisions Impacting Pharmacies and When They Take Effect

The new regulations directly address PBM practices that have historically harmed independent pharmacies and disrupted patient care.

Protecting Medicare Beneficiaries’ Freedom of Pharmacy Choice

• “Any Willing Pharmacy” (AWP) Requirements: Medicare Prescription Drug Plan (PDP) sponsors must allow any willing pharmacy that meets the plan’s standard contract terms and conditions to participate as a network pharmacy of the plan. Part D plan sponsors will not be able to arbitrarily exclude independent pharmacies from their networks in favor of PBM–owned or affiliated pharmacies. This provision strengthens patient choice and protects local pharmacy access.
• Reasonable and Relevant Contract Terms: PDP sponsors must offer “reasonable and relevant” contract terms based on standards established by the secretary of Health and Human Services (HHS).

Key Implementation Milestones

• By April 1, 2027: HHS must issue a request for information to gather input regarding trends on, among other things, prescription drug plan and network pharmacy contract terms and conditions.
• By April 3, 2028: HHS must establish the standards for “reasonable and relevant” contract terms and conditions. This timing will ensure that the reasonable and relevant contract terms are included in the PDP sponsor contracts offered in Spring 2028 for the 2029 Medicare Part D plan year. 
• By January 1, 2029: HHS must establish a process for pharmacies to report violations of the standards for reasonable and relevant contract terms. PBMs will be prohibited from retaliating against pharmacies who make these reports, and pharmacies making unfounded reports may be penalized.
• Effective January 1, 2029: Medicare Part D plan sponsors must have reasonable and relevant contract terms and conditions in place. If a PDP sponsor violates the standards, HHS may implement sanctions, including civil monetary penalties. These provisions are expected to directly address take-it-or-leave-it PBM contracts and unfair reimbursement methodologies. 
• Designation of “Essential Retail Pharmacies”: The Medicare Part D program will distinguish between “essential retail pharmacies” and non-essential retail pharmacies. 

Definition of an Essential Retail Pharmacy

“Essential retail pharmacies” are defined as pharmacies that are not affiliated with a PBM, and located in: 

1. a rural area, as the retail only pharmacy within 10 miles 
2. a suburban area, as the only retail pharmacy within 2 miles 
3. an urban area, as the only retail pharmacy within 1 mile

The designation is particularly significant for rural and independent pharmacies serving medically underserved populations.

Implementation Timeline 

• On or after January 1, 2028, HHS must develop a report comparing factors affecting essential and non-essential retail pharmacies, their reimbursement rates, and their participation rates. This report must be published every two years until 2034.
• On or after January 1, 2028, HHS must publish a publicly available list of essential retail pharmacies.

PBM Accountability and Transparency in Drug Payments and Pricing

• Prohibition on Income Other Than Bona Fide Service Fees: Beginning January 1, 2028, PDP sponsors will only be able to make payments to PBMs for bona fide services consistent with fair market value. PBMs will not be able to derive remuneration for Part D drugs based on their pricing. This addresses long-standing spread pricing concerns. 
• Pass-Through Requirement for Incentive Payments: PBMs will be required to fully pass through any rebates, discounts, or other price concessions to PDP sponsors. This provision targets pricing opacity that has historically driven up patient costs and squeezed pharmacy margins. 
• PBM Reporting Requirements: Beginning on or after July 1, 2028, PBMs will be required to submit annual reports to PDP sponsors and HHS providing information related to drug spending, rebates, pricing arrangements, and benefit designs from the previous plan year. These disclosures are intended to strengthen federal oversight and expose anticompetitive PBM behavior.

Key Takeaways for Independent Pharmacy Owners

• US Congress enacted the most significant federal PBM reform in decades in 2026, fundamentally reshaping PBM operations under Medicare Part D.
• Independent pharmacies gain new protections against network exclusion through “any willing pharmacy” requirements.
• PBMs may no longer profit from drug pricing or spread pricing beginning in 2028.
• All manufacturer rebates and discounts must be fully passed through.
• Non-PBM-affiliated pharmacies may qualify as essential retail pharmacies, strengthening access and reimbursement protections.
• Expanded PBM reporting and audit rights will provide greater visibility into reimbursement practices and benefit design.
• Most reforms take effect between 2028 and 2029, creating a critical planning window.

What Independent Pharmacy Owners Should Do Now

Although most PBM reform provisions will not take effect until 2028 and 2029, independent pharmacy owners should begin planning now to position their businesses for compliance, improved reimbursement, and long-term sustainability.

1. Review Current PBM and Medicare Part D Contracts: Evaluate existing PBM contracts for reimbursement methodologies, network participation requirements, audit provisions, and termination rights. Understanding current contract terms will help identify areas that may conflict with forthcoming federal standards for reasonable and relevant terms.
2. Assess Eligibility as an “Essential Retail Pharmacy”: Pharmacies serving rural, suburban, or underserved urban areas should evaluate whether they qualify as an “essential retail pharmacy” under the new Medicare Part D framework. This designation may strengthen access protections and influence future reimbursement and network participation decisions and could guide business decisions regarding expansion etc.
3. Monitor Network Participation and Exclusion Risks: Despite upcoming “any willing pharmacy” protections, pharmacy owners should continue monitoring network access decisions and documenting any exclusionary or discriminatory practices in preparation for future reporting and enforcement mechanisms.
4. Prepare for Increased PBM Transparency and Reporting: New PBM reporting requirements will bring greater visibility into pricing, rebates, and benefit design. Pharmacy owners should be prepared to analyze PBM disclosures and leverage this information during contract negotiations and reimbursement disputes.
5. Engage Legal and Compliance Advisors Early: Early consultation with experienced pharmacy counsel can help independent pharmacies anticipate regulatory changes, align contract strategies with new federal requirements, and avoid compliance risks once the reforms take effect.
6. Plan Strategically for 2028–2029 Implementation: The phased implementation timeline provides a critical opportunity to reassess long-term business strategy, including payor mix, Medicare Part D participation, and PBM relationships, before the new rules become enforceable.

Many questions remain regarding the implementation and enforcement of these reforms against a pre-existing backdrop of state-based reforms. If you have any questions regarding how these changes could affect your pharmacy business, do not hesitate to reach out to 

Barclay Damon’s national Pharmacy Team is advising and representing independent pharmacies nationwide on compliance with federal and state laws, Medicare Part D requirements, and payor disputes. If your pharmacy has questions about the effects of the 2026 PBM reforms on contracts, reimbursement, or network participation, our team is prepared to help.

If you have any questions regarding the content of this alert, please contact Brad Gallagher or Linda Clark, co-leaders of the firm’s Health Care Controversies and Pharmacy Teams, at bgallagher@barclaydamon.com and lclark@barclaydamon.com; Amanda Rhodes, associate, at arhodes@barclaydamon.com; or another member of the firm’s Health Care Controversies or Pharmacy Teams.
                                                                                                   
¹These reforms primarily apply to Medicare Part D and do not automatically extend to commercial or Medicaid managed care plans, although they may influence future federal and state PBM policy.