Drug Pricing, PBM Reform, and the 2026 Midterms: What You Need to Know

With November's midterm elections now less than seven months away, healthcare policy is entering one of its most consequential inflection points in years. During a session at Asembia's AXS26 Summit in Las Vegas, analysts from Avalere Health laid out the intersecting forces that are already reshaping how pharmaceutical companies must think about launch strategy, contracting, and market access.

The session, titled "Healthcare and Drug Pricing at a Crossroads: Policy Directions Ahead of Midterms," was presented by Mina Allo, PharmD, MPH, Managing Director for Market Access and Commercialization; Mike Ciarametaro, MBA, Managing Director for Policy; and Lisa Joldersma, JD, Senior Advisor for Policy, all from Avalere Health. The analysts framed their analysis around all three branches of government—administrative, legislative, and judicial—as simultaneous drivers of change, a construct that underscores how few operational levers now exist for manufacturers and their distribution partners that are fully insulated from policy exposure.

What the FTC-PBM Settlements Actually Mean for Manufacturers and Plan Sponsors

The panel opened with a detailed accounting of the flurry of PBM reform activity that has materialized over the past six months—a pace that analysts characterized as significant after years of legislative gridlock.

The FTC reached voluntary settlements with Express Scripts and, preliminarily, with CVS Caremark and Optum Rx, requiring extensive commercial data reporting, compensation de-linking from rebates, and an end to spread pricing practices. However, the panel flagged a critical structural limitation: the settlement terms apply only to PBMs' standard product offerings. Employers who prefer legacy arrangements retain the ability to opt out, effectively creating a bifurcated market. The FTC did require ESI to invest $10 million in marketing its standard offering to plan sponsors, but whether employer uptake will be meaningful remains to be seen.

Equally significant is the Department of Labor's proposed rule, years in the making, that would impose ERISA fiduciary obligations on plan sponsors with respect to retained rebates. The rule does not mandate rebate pass-through outright, but it would require plan sponsors to affirmatively justify to the DOL and to their plan members why a PBM retaining rebates is in the members' best interest—a standard that could effectively produce the same outcome through scrutiny rather than mandate.

Congress also enacted limited but meaningful reforms through the Consolidated Appropriations Act of 2026, including a ban on fee-based compensation tied to drug price for Part D PBMs, a rebate pass-through requirement, and statutory clarification of ERISA fiduciary coverage of PBMs. The panel noted an asymmetry worth monitoring closely: de-linking requirements currently apply differently to the commercial market versus Medicare Part D, creating a patchwork that manufacturers operating across both will need to map carefully.

PBM Reform and MFN Pricing Are on a Collision Course

One of the session's sharper analytical observations concerned the potential incompatibility of simultaneous PBM reform and drug price regulation frameworks. The analysts noted that many of the pricing mechanisms being used or considered at the state level, including upper payment limits set by Prescription Drug Affordability Boards, are deeply reliant on rebate-based arrangements, even as federal reform is designed to discourage rebates. That contradiction, the panel argued, means that PBM reform is likely not finished; another round of legislative refinement will probably be necessary once the market absorbs the current changes.

The Drug Price Regulation Timeline: Where MFN, IRA, and Tariffs Now Stand

The presentation walked through a dense regulatory timeline stretching from April 2025 through the present, capturing the administration's aggressive use of executive authority on drug pricing in the absence of sufficient congressional support for codification. The Trump administration has issued executive orders on drug pricing and Most Favored Nation pricing, sent MFN letters to manufacturers, launched TrumpRx in February 2026, and implemented pharmaceutical tariffs with an exemption carved out for manufacturers that have signed existing MFN agreements. Those that commit to domestic production offshoring of at least 20% face a reduced tariff rate.

On Inflation Reduction Act (IRA) implementation, the negotiation of Maximum Fair Prices for IPAY 2028 drugs is underway. Notably, this is the first negotiation cycle to include Part B products, with an immunology focus. IPAY 2029 guidance is anticipated. The panel addressed the complexity surrounding single-source products and how CMS is likely to handle drugs with active ingredient formulations that affect bioavailability, noting that CMS faces real financial trade-offs in those determinations given what occurred when a single generic entered a previously negotiated market.

Looking to 2027, the analysts noted that Part B sequestration-related legislative changes are expected to advance, along with a Democratic policy agenda that would expand the IRA's reach, including proposals to reduce the current exclusion periods (nine years for small molecules, thirteen for biologics) before drugs become eligible for price negotiation and to incorporate international reference pricing as one of multiple factors in the negotiation framework. The analysts described this multi-factor IRP approach as more legally defensible and strategically potent than a strict one-to-one MFN formula and one that will be considerably more difficult for manufacturers to challenge or delay.

What This Means for the Drug Distribution Ecosystem

The session's market response discussion was particularly relevant for specialty pharmacy and pharma commerce stakeholders. The FTC-ESI settlement's prohibition on spread pricing is primarily targeted at the retail and independent pharmacy channels—particularly rural markets where pharmacy deserts have formed as a direct result of spread pricing arbitrage. The analysts noted that the settlement also explicitly mandates payment for non-dispensing services, including medication therapy management, vaccinations, wellness counseling, and screening, which are meaningful developments for a pharmacy sector that has long sought appropriate reimbursement for clinical services beyond the prescription fill.

On the emerging market side, the session pointed to the rapid expansion of Amazon One Medical as a telemedicine-to-pharmacy pipeline—a model that diagnoses patients and routes them to Amazon pharmacy fulfillment—as a structural shift that is initially concentrated in the GLP-1 space but bears watching for expansion into specialty categories. Walmart's recent announcement of a specialty pharmacy retail presence was flagged in the same breath, with analysts framing the consumerization of specialty pharmacy as one of the most important trends to monitor over the next several years. ICHRAs (Individual Coverage Health Reimbursement Arrangements) were also cited as a vehicle for employers to cap healthcare cost exposure, which is expected to see increased adoption as overall healthcare expenditure continues to rise.

How to Manage Product Portfolios in an Uncertain Environment

For pharma companies managing both pipeline and inline assets, the session's clearest practical guidance was to resist making binary decisions based on any single policy scenario and instead build portfolio strategies with optionality. The analysts outlined several approaches gaining traction: creating greater pricing separation between US and ex-US markets; raising ex-US net prices over time as a hedge against MFN reference pricing exposure; and being more selective about launch timing and geographic sequencing.

For manufacturers with existing ex-US market presence, the panel noted a strategic irony emerging: while US policy is pushing away from rebates and complex contracting, some manufacturers may actually find value in expanding ex-US contracting vehicles precisely because the US government lacks access to net prices in those markets—providing a degree of shielding from reference pricing benchmarks.

The overarching message was that companies should treat integration of US and ex-US strategy as an organizational imperative, not an afterthought, and should embed policy scenario planning directly into pipeline development decisions rather than treating it as a downstream commercial consideration.

The Bottom Line Heading Into the Midterms

The panel concluded with four takeaways that bear directly on pharma commerce planning: midterm election outcomes will be the single largest driver of health policy direction through 2028; drug pricing and PBM reform will remain the central political flashpoints regardless of which party controls the House; vertical integration and direct-to-consumer strategies will either accelerate or be restructured based on election results; and the employer market's response to new PBM transparency requirements will be a critical signal to watch, as employers now have more information than they have ever had, and what they choose to do with it will shape the contracting landscape considerably.

As one analyst put it, the most prudent posture for any organization managing specialty assets right now is to take the slow evolution approach: take fundamental steps, build in flexibility, and preserve the ability to pivot as the environment continues to shift.

Reference:

Joldersma S, Allo M, Ciarametaro M. Healthcare and drug pricing at a crossroads: policy directions ahead of the midterms. Presented at: AXS26; April 27-30, 2026; Las Vegas, NV.