By Lari Harding, SVP, Industry Affairs & Strategic Partnerships, Inmar Intelligence
February 3, 2026 the president signed the Consolidated Appropriations Act for FY 2026, and attention is largely centered on topline funding levels and healthcare extenders. Yet embedded in the statute is a set of pharmacy benefit manager (PBM) reforms that—while narrower than earlier proposals—mark the most consequential federal recalibration of pharmacy reimbursement mechanics in decades.
More than half of U.S. states have enacted some form of PBM reform, but weak enforcement authority, national contracting practices, and uneven implementation have limited their impact. Those constraints underscore why federal action matters. Rather than attempting sweeping reform, the FY 2026 law takes a targeted approach: it applies only to Medicare Part D, avoids mandated benchmark resets, and stops short of banning spread pricing outright. Instead, it requires PBMs to report detailed information to plan sponsors, including pricing and spending arrangements related to spread pricing.
Early quantitative modeling suggests that this narrower approach may be its greatest strength—delivering measurable margin improvement for pharmacies with significantly less downside risk than broader proposals.
From Opaque Spread to “Reasonable and Relevant” Payment
At the core of the PBM provisions is a deceptively simple standard: pharmacy contract terms, reimbursement methodologies, and post-adjudication fees in Medicare Part D must be “reasonable and relevant” to the cost and services associated with dispensing covered drugs.
The statute does not impose a price floor, mandate NADAC, or rewrite acquisition benchmarks. Instead, it constrains PBM discretion by constraining PBM compensation structures tied to list prices and retroactive fees, while increasing transparency and enforceability around rebate and spread arrangements.
In effect, the reform targets PBM incentive structures and spread economics—not drug prices themselves.
What the Early Data Show
Using Inmar Intelligence aggregated transaction data across 35 retail pharmacy chains, early modeling indicates that the FY 2026 PBM reforms could generate $25,000 to $125,000 in incremental annual margin per pharmacy. That equates to approximately 0.30% to 1.52% of total sales, depending on adoption and enforcement scenarios. These estimates assume partial enforcement, conservative behavioral adjustment by PBMs, and no spillover into non–Part D lines of business.
In isolation, those figures may seem modest. In context, they are material. The average retail pharmacy generates roughly $8.2 million in annual revenue (Inmar Intelligence) and operates on net profit of about $50,000—approximately 0.62% margins (CSIMarket)—leaving little room to absorb reimbursement compression or cash-flow delays. Against that baseline, even the lower end of the projected impact represents meaningful stabilization.
The timing also matters. These PBM reforms arrive alongside Inflation Reduction Act drug price negotiations, emerging international reference pricing policies, and renewed debate over broader PBM reform—all of which are compressing traditional drug-margin economics while increasing liquidity and operational strain. In that environment, the FY 2026 provisions act less as a standalone fix and more as a counterweight: constraining PBM spread and retroactive fees in Medicare Part D precisely as other policies weaken rebate-driven revenue models. The result is a partial but meaningful rebalancing—lower costs for patients paired with greater reimbursement predictability for pharmacies, without introducing new benchmark risk or cash-flow volatility.
Why the Risk Profile Matters More Than the Upside
The most consequential feature of the FY 2026 PBM reforms may be what they do not do.
- They do not apply to Medicaid managed care.
- They do not extend to commercial or ERISA plans.
- They do not mandate expanded NADAC participation.
- They do not reset generic reimbursement benchmarks.
As a result, pharmacies avoid the 2–10% generic reimbursement reductions that could accompany more comprehensive PBM reform tied to expanded NADAC reporting. While the FY 2026 provisions may deliver only 15–25% of the total margin upside of a full PBM Reform Act, they do so with roughly 80% less economic risk to pharmacy cash flow and acquisition cost recovery.
For an industry operating on razor-thin margins, that asymmetry is not a compromise—it is the point.
Spillover May Drive the Real Upside
Although the statute technically applies only to Medicare Part D, the “reasonable and relevant” contracting standard is well positioned to extend beyond it.
While unlikely to be immediate, operational spillover could occur. PBMs have strong incentives to operationalize a single, defensible contracting framework across lines of business. Large employers, public-sector purchasers, and coalition buyers are similarly incentivized to demand Medicare-aligned transparency—particularly when it does not require explicit price controls.
Even partial spillover into large self-funded commercial plans could compound the financial impact well beyond statutory estimates. While not included in early modeling, this medium-term upside differentiates the FY 2026 reforms from prior, more prescriptive efforts.
A Stabilizer—Not a Silver Bullet
The PBM reforms in the Consolidated Appropriations Act do not resolve every structural challenge facing retail pharmacy. They do not address delayed cash flow from IRA manufacturer payments, margin pressure from international reference pricing, or chronic underpayment for dispensing relative to documented costs.
But quantitatively, they achieve something rare in federal pharmacy policy: improving margins without introducing new liquidity strain or operational complexity.
For policymakers, the reforms serve as a proof point. For pharmacies, they represent the first federal reimbursement change in years that is immediately accretive, measurable, and low-risk. And for an industry navigating its most significant economic reset in decades, that combination may matter more than sweeping reform ever could.
Execution Will Determine the Outcome
As implementation begins, outcomes will hinge on execution. Greater transparency and new contracting standards create opportunity—but only for pharmacies equipped to act on them. Claim-level reimbursement monitoring, visibility into contract terms, and reconciliation of expected versus realized payment will be essential. Without integrated analytics and real-time exception management, pharmacies risk leaving value on the table—or failing to detect non-compliant practices altogether.
In this environment, reimbursement management is no longer a back-office function. It is a core operational capability—and the determining factor in whether PBM reform translates into sustainable financial improvement.