Editor’s Note: This op-ed was originally published in STAT+ on March 30, 2026.
Consumer groups, independent pharmacies, and drugmakers rightly complained for years that pharmacy benefit managers (PBMs) have used their position as supply chain middlemen to benefit themselves at the expense of patients and payers.
At last, relief is in sight. Congress and the Department of Labor are now poised to align PBMs’ incentives with employers and patients, including making PBMs legally accountable as fiduciaries.
I’ve been studying PBMs for as long as the complaints have been piling up. My research with colleagues at the USC Schaeffer Center shows that PBMs negotiate, but patients and payers too often do not benefit from it. For example, between 2014 and 2018, PBMs’ share of insulin expenditures nearly tripled with no overall savings to payers. At the same time, higher rebates led to higher list prices — roughly $1.17 in higher list price for every additional dollar in rebates — which inflates out-of-pocket costs for patients whose cost-sharing is tied to list prices.
Congress and regulators are now converging on a practical, market-based response: the bipartisan PBM Fiduciary Accountability, Integrity, and Reform (FAIR) Act and the Department of Labor’s proposed PBM compensation disclosure rules. Together they would make drug purchasing work more like a real market — where the buyer can see how the agent gets paid, and the agent has a legal duty to act in the buyer’s interest.
It’s clear that disclosure plus enforceable fiduciary responsibility will do what years of piecemeal reforms have not. Employers and other health plan sponsors need to be able to compare PBMs on real, all-in costs. Payment structures that profit from higher list prices must end. And plans should have meaningful remedies if a PBM is self-dealing. As I told the Senate Committee on the Judiciary, transparency helps employers identify when they’re being overcharged, and fiduciary responsibility ensures PBMs can be held accountable in court.
The FAIR Act would impose fiduciary duties on PBMs for their core functions — formulary design, pharmacy network management, rebate negotiations — and ensure the right to sue when PBMs self-deal, including steering patients to pharmacies owned by their parent company. The Department of Labor’s proposal would require clearer disclosure of PBM compensation and strengthen employers’ ability to audit and evaluate whether it is reasonable.
Both initiatives add to actions in Washington this year. President Trump signed legislation mandating that PBMs pass through rebates in their entirety to employer health plans. The Federal Trade Commission also announced a landmark settlement with Express Scripts requiring the company to overhaul its business model, promising up to $7 billion in patient savings on drugs like insulin over a decade.
As encouraging as these steps appear, however, past behavior suggests PBMs will work around the new guardrails in the absence of a requirement to act expressly in the interest of employers and patients.
The PBM industry’s trade association, the Pharmaceutical Care Management Association (PCMA), argues PBMs aren’t fiduciaries under the Employee Retirement and Income Security Act (ERISA) — the federal law governing most employer health plans — because they don’t exercise discretionary authority over plan funds. At the same time, PBMs evade state attempts to impose fiduciary obligations by claiming that ERISA preempts state regulation. This creates a vacuum where PBMs sidestep accountability.
The PBM lobby says its members “negotiate directly with drug companies,” “promote competition,” and “manage prescription drug benefits efficiently” to keep medications affordable. These functions require significant discretionary decisions by PBMs while the employers have very little transparency or oversight into those decisions. PBMs can’t have it both ways: If they truly shape formularies, networks, and rebate arrangements that influence what plans and patients pay and which drugs are used, they are exercising the kind of discretion that should come with fiduciary responsibility.
PBMs also warn that fiduciary obligations would “upend” existing contracts. If your business model depends on keeping your client in the dark on how you get paid — or on avoiding legal accountability when your financial incentives diverge from the client’s best interests — then yes, fiduciary duty will upend that model. That’s the point.
We have done this before. Congress and regulators applied compensation disclosure to retirement plan service providers when many 401(k) participants lacked visibility into embedded fees. After the rules took effect, research found that defined contribution plan fees fell, more low-fee plans became available, and participants reallocated toward better value. The parallel is direct: When an intermediary is paid in hard-to-see ways and faces conflicts between its own revenue and the client’s goals, transparency and fiduciary accountability are the tools that realign incentives. We can do the same for prescription drug benefits.
If PBMs want to claim they save employers and patients billions, they should be willing to prove it — and to be held responsible when they don’t. Like it or not, that means fiduciary responsibility.
Neeraj Sood, Ph.D., is a senior scholar at the USC Schaeffer Center for Health Policy and Economics and a professor at the USC Sol Price School of Public Policy.
