Federal and State Policymakers Push Forward with PBM and Drug Pricing Reform Even in the Wake of Sweeping Actions Earlier this Year

Despite the flurry of reform activity throughout the first quarter of 2026, the pace of new PBM regulation and drug pricing reforms shows no sign of tapering off. Instead, both federal and state legislatures continue to target PBMs and drug pricing practices.

Continued Push by White House to Codify Trump’s Most Favored Nation (MFN) Agreements 

The White House seems to be moving forward with efforts to codify President Trump’s MFN drug pricing deals. According to reports, in an effort to gain industry support of the federal legislative efforts to codify the deals, the administration has drafted legislative text and invited a small group of pharmaceutical manufacturers to discuss.

This push for codification comes despite bipartisan hesitation in Congress, where several lawmakers have raised questions about the scope, mechanics, and long‑term implications of the MFN agreements. As recently discussed, some members of Congress have demanded answers and detailed information about the terms of the MFN agreements before they will consider legislative action codifying the deals.

In the meantime, President Trump announced a new 100% tariff on patented pharmaceutical products and ingredients. Notably, companies that have entered into both an MFN pricing agreement with the Department of Health and Human Services and an onshoring agreement with the Department of Commerce are exempt from the tariffs through January 20, 2029. The Presidential Proclamation also includes total or partial exemptions for countries with trade deals, generic pharmaceuticals, and certain specialty pharmaceutical products.

Federal and State Momentum Toward Imposing Fiduciary Duties on PBMs

In December 2025, federal lawmakers introduced the bipartisan PBM Fiduciary Accountability, Integrity, and Reform (“FAIR”) Act, which would impose fiduciary duties and responsibilities on PBMs. Specifically, the proposed legislation would amend the Employee Retirement Income Security Act (ERISA) to deem PBMs as fiduciaries to ERISA-covered group health plans under law.

In addition, a number of states have recently introduced legislation proposing to impose fiduciary obligations on PBMs. These efforts reflect an ongoing policy interest in redefining the role of PBMs within the prescription drug supply chain and holding them to heightened, fiduciary standards in their business and contracting practices. Specifically, states have proposed fiduciary obligations in a range of contexts, typically seeking to establish PBMs as fiduciaries, or held to fiduciary standards, either to the health plans and plan sponsors with which they contract, to the covered persons enrolled in the plan, or to both. 

Despite this continued push for fiduciary obligations, the fiduciary obligations in many of the proposed state laws have not passed committee or the bills have been amended to remove the fiduciary language.

States Continue with Aggressive PBM Legislative Reform 

Despite the continued federal focus and reform efforts related to prescription drug costs, state legislators have continued to advance targeted legislation aimed at pharmacy benefit managers and related entities. Recent state activity has focused on PBM – pharmacy ownership structures.

Ownership Disclosure and Structural Restrictions

Another key trend in proposed drug pricing legislation focuses on pharmacy ownership and vertical integration within the pharmaceutical supply chain. The “Break Up Big Medicine Act” (S.3822), a federal proposal aimed at prohibiting common ownership among PBMs, insurers, and wholesalers, reflects broader concerns about vertical integration in the pharmaceutical supply chain. These same concerns drive a range of proposed state drug pricing legislation focused on pharmacy ownership and related market practices.

Specifically, states are pursuing limits on vertical integration in the pharmaceutical supply chain through two primary approaches: imposing ownership disclosure and transparency requirements on PBM licensees or pharmacy permit holders and restricting or prohibiting pharmacy licensure based on ownership by certain state‑regulated entities.

Some state proposals emphasize disclosure, and would require entities to disclose ownership interests, corporate structures, and/or affiliate relationships. These disclosures would be required at some point or annually based on the state licensing requirements and have been proposed for both pharmacy permits and PBM licenses.

Other legislative proposals directly target pharmacy ownership structures, seeking to prohibit PBMs, and in some cases health plans, from owning, operating, or exercising control over pharmacies. These provisions are frequently tied to licensing frameworks, conditioning a pharmacy’s ability to obtain or retain an operating license or permit on compliance with ownership restrictions.

Tennessee’s Strategic Rewrite after AR Act 624: FAIR Rx

As previously discussed, Arkansas Act 624, passed in 2025, prohibits PBMs from acquiring or holding a direct or indirect interest in a pharmacy. However, AR Act 642 was quickly challenged in federal court, and ultimately enjoined, with the court finding the law likely violated the Commerce Clause of the US Constitution and was preempted by TRICARE. This case is now before the 8th Circuit. Even after AR Act 624 was enjoined, states have continued to explore similar regulatory approaches to pharmacy ownership and vertical integration.

Most recently, on January 22, 2026, Tennessee lawmakers introduced the Freedom, Access, and Integrity in Registered Pharmacy (FAIR Rx) Act (S.B. 2040 / H.B. 1959), which would establish comprehensive PBM regulations, including prohibitions focused specifically on PBM ownership and control of pharmacies. The Tennessee FAIR Rx Act language closely mirrors Arkansas’s first‑in‑the‑nation attempt to bar PBMs from directly or indirectly owning pharmacies, but with a few noteworthy twists. 

Against this backdrop, Tennessee’s Fair Rx Act would adopt nearly identical prohibitions outlined under AR Act 642, but it includes additional language that appears intentionally crafted to avoid the constitutional pitfalls identified in the Arkansas injunction. Specifically, the Fair Rx Act language explicitly states that the law regulates only the “qualifications, licensure, ownership, and control of pharmacies as a condition of professional practice within the state” and that the law “does not regulate drug manufacturing, labeling, interstate shipment, pricing, reimbursement, insurance benefits, or the design or administration” of ERISA‑governed employee benefit plans. This carefully tailored language appears aimed at shoring up the law against the very constitutional challenges that stalled Arkansas’s Act 624.

Conclusion

As regulators continue to pursue increasingly assertive approaches to PBM regulation, particularly in the areas of fiduciary obligations and pharmacy ownership structures, legislative activity and related litigation are likely to continue evolving. Stay tuned to our Health Viewpoints as we monitor these developments and provide updates as laws advance and courts weigh in on their validity.
 

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