Federal Roundup: Updates for PBMs and Medicare Advantage Organizations

In June 2026, federal regulators and lawmakers continued their efforts to improve drug affordability through targeted reforms. These recent developments will primarily impact pharmaceutical manufacturers, managed care organizations, and pharmacy benefit managers (PBM) serving Medicare Part D program members. PBMs, Medicare Advantage organizations, and Part D sponsors should monitor these changes in the interest of maintaining compliance and providing input on regulatory proposals that may influence their business operations or compensation structures in the future.

• • On June 16, 2026, the Centers for Medicare and Medicaid Services (CMS) published a proposed rule (CMS-4215-P) that would convert the Medicare Drug Price Negotiation Program — which was established by the Inflation Reduction Act (IRA) of 2022 and has been carried out through agency guidance for the initial price applicability years of 2026 through 2028 — into binding federal regulation as of plan year 2029. Although primarily relevant to drug manufacturers, the rule would formalize CMS’s practice of using PBM-provided data to inform price negotiations for drugs covered by Medicare Part D while simultaneously narrowing PBMs’ discretion over formulary design and pharmacy reimbursement for selected drugs. The comment period will close August 17, 2026.
  • On June 16, 2026, the Senate Finance Committee Minority Staff published a request for information (RFI) to solicit input on potential legislative options for reducing what manufacturers charge for prescription drugs, lowering patient out-of-pocket costs and addressing supply chain incentive structures, and supporting biopharmaceutical innovation. Several of the specific policy questions posed (including those relating to formulary design, contracting practices, generic pricing, vertical integration, and private labeling) would have direct implications for PBM operations and business models. The committee will be accepting comments until August 17, 2026.
  • On June 18, 2026, CMS published an RFI seeking technical public input on PBM compensation arrangements and data collection. CMS will use the feedback to inform rulemaking implementing Section 6224 of the Consolidated Appropriations Act (CAA), 2026, which, for plan years beginning on or after 2028, will limit what PBMs and their affiliated entities can earn from Medicare Part D drug benefit services and impose annual PBM data reporting requirements. CMS will be accepting comments until July 20, 2026.

Further details on each of these developments can be found below.

Context: CMS’s Proposed Rule Formalizes the Medicare Drug Price Negotiation Program

If finalized, the proposals in CMS-4215-P would translate into binding federal regulation the operational policies currently governing the Medicare Drug Price Negotiation Program. The proposed rule seeks to:

• • Permanently codify the use of PBM-negotiated rebates and Direct and Indirect Remuneration (DIR) data as direct inputs into how CMS calculates the maximum fair price for selected drugs. Because net prices across an entire therapeutic class factor into CMS’s opening offer, PBM contracting decisions on comparable drugs can impact government negotiation outcomes.
  • Authorize CMS to actively scrutinize whether tiering decisions, step therapy requirements, prior authorization standards, and quantity limits are being used to steer patients away from selected drugs. This represents a significant expansion of regulatory oversight into day-to-day PBM formulary administration and is intended to ensure greater member access to selected drugs.
  • Require that selected drugs remain on formulary while a maximum fair price (MFP) is in effect, while simultaneously establishing a defined pathway under which a plan sponsor may remove a selected drug from formulary if it concurrently adds a comparable product (such as an authorized generic or unbranded biologic) at the same or a lower cost-sharing tier. In the latter case, utilization management requirements should be no more restrictive than those applied to the removed product, subject to applicable notice requirements.
  • Incorporate Medicare Advantage encounter data into the expenditure calculations used to identify drugs eligible for negotiation. This expanded baseline could shift which drugs enter the negotiation-eligible pool in future years, requiring PBMs to revisit their drug selection forecasting and manufacturer contracting strategies.
  • Codify a formal standard for assessing the entry of new generic or biosimilar drugs into the market, with assessments occurring monthly during active negotiation windows and twice yearly thereafter. This defined review schedule directly affects the predictability of when PBMs can expect a selected drug to exit the negotiation program.
  • Publish the MFP file using national drug code identifiers, covering all dosage forms and strengths of a selected drug under a 30-day equivalent supply methodology. PBMs would need to ensure that their claims adjudication systems can accurately apply the MFP by mapping transactions to the NDC-11 codes published in the MFP file.

Context: Senate Finance Committee Requests Input on Legislative Tactics to Reduce Drug Prices

Drawing on input gathered from over 70 health care organizations, researchers, and industry groups, the Senate Finance Committee Minority Staff’s RFI (Commonsense Policy Options to Lower Drug Prices for Patients) seeks feedback on a variety of legislative methods that could help to reduce drug costs. The RFI identifies potential legislative directions across three areas: reducing manufacturer drug prices, lowering patient out-of-pocket costs and recalibrating supply chain incentive structures, and supporting biopharmaceutical innovation. For PBMs specifically, several policy proposals — including those relating to formulary design, contracting practices, generic drug pricing, vertical integration, and private labeling — carry direct implications for business operations and compensation structures for Medicare Part D and other markets. Notably, the RFI:

• • Seeks feedback on whether patient cost-sharing in Medicare Part D should be recalculated to reflect net drug prices after rebates, rather than pre-rebate benchmarks that approximate list prices, and solicits input on oversight mechanisms to address formulary practices that may favor higher-list-price products over lower-cost alternatives.
  • Solicits input on whether CMS should develop updated standards for how margin is evaluated in the Part D bid process for vertically integrated plan sponsors, given that the current framework does not capture earnings flowing to a vertically integrated parent organization even when program subsidies may be indirectly funding those earnings.
  • Requests suggestions on how to address pricing disparities tied to PBM-affiliated private label medications in Medicare Part D, including the requirement that PBMs disclose the spread between their private labeler's acquisition cost and the price the PMBs charge.
  • Asks for input on whether “exclusive negotiator” provisions in PBM-plan contracts and “non-solicitation” terms in PBM-manufacturer contracts should face new regulatory constraints or prohibition, while expressly recognizing that PBMs have a reasonable basis to argue such provisions protect proprietary pricing strategies and negotiating position.

Comments will be accepted until the submission window closes on August 17, 2026.

Context: CMS Seeks Context on PBM Compensation to Inform Future Rulemaking

With the RFI on Pharmacy Benefit Manager Compensation and Data Collection, CMS intends to gather real-world information on how PBM arrangements currently operate so the agency can define key terms and develop regulations that reflect actual industry practice; submitted commentary will directly shape the rules PBMs will operate under starting in 2028. CMS requests input organized around six sections in relation to the framework under Section 6224 of the CAA, 2026:

• • Definitions of “Pharmacy Benefit Manager” and “Affiliate.” CMS wants examples of which entities perform PBM functions (e.g., claims processing, utilization review, pharmacy network contracting; and “related services”), including intermediaries and vendors that may not refer to themselves as PBMs, and which connected entities should be treated as PBM “affiliates.” Comments should map functions and “related services,” ownership/control and contractual relationships, and payment mechanics — including what drives payment variability (e.g., utilization, formulary status).
  • Definition of “Bona Fide Service Fees” (BFSF). CMS is probing how current PBM/affiliate remuneration aligns with BFSF requirements (e.g., fair market value flat-dollar, tied to a performed and itemized service, not contingent on price, rebates, formulary, or referrals, and not passed on downstream), as well as how “incentive payments” operate. Comments should catalog each fee type, link it to specific services, and flag any gray areas, such as compensation not tied to a service actually performed or that would not otherwise be contracted for absent the arrangement.
  • Determination of “Fair Market Value” (FMV). CMS wants workable FMV methods that can be audited and any limits to those methods. Comments should propose FMV approaches (e.g., benchmarking, RFP/competitive bids, third-party valuation) and address whether standard practices for determining FMV may vary by entity type or account for market dynamics.
  • Pharmacy Payment. CMS asks for identification of arrangements that do and do not fall within statutory pharmacy payment protections (e.g., ingredient-cost reimbursement, flat-dispensing fees). Comments should list current reimbursement components and flag any gray areas of payments that do not fall within the statutory framework that may benefit from clarification.
  • Data Collection. CMS seeks input on the annual PBM data` reporting framework — covering detailed information such as drug utilization, dispensing activity, costs, and pricing — and asks whether additional data elements would improve implementation and monitoring around the remuneration requirements of Section 6224.

CMS requests that comments specify the section(s) that are being addressed and the circumstances to which they relate. Comments are due by 5 p.m. on July 20, 2026.

Next Steps for PBMs and Medicare Advantage Organizations

Taken together, these three developments reflect a sustained and coordinated push by federal regulators and lawmakers to reshape drug pricing, supply chain compensation, and formulary oversight within Medicare Part D and beyond. Medicare Advantage organizations, PBMs, and Part D sponsors should closely monitor both the CMS rulemaking processes and the Senate Finance Committee’s legislative inquiry, as the policies that emerge from these initiatives stand to materially affect PBM compensation structures and plan formulary administration practices, contracting strategies, and data reporting obligations. With multiple comment windows currently open and formal rulemaking on the horizon, PBMs and plans have a near-term opportunity to engage directly with regulators and legislators to help shape the rules under which they will ultimately operate.

We highly encourage organizations with questions about the proposed rulemaking or RFIs to reach out to their preferred Crowell & Moring lawyer or any author of this alert. Our team can help PBMs and Medicare Advantage organizations prepare for future changes, maintain compliance with evolving regulations, and submit comments.