Pharmacy benefit managers (PBMs) and plan sponsors are preparing for the 2028 implementation of the 2026 Consolidated Appropriations Act (CAA), which will bring significant changes to drug pricing. According to Brandon Kessler, a principal at Milliman, the most noticeable shift for payers will be the reversal of the traditional relationship between ingredient costs and dispensing fees under a cost-plus pricing model.
At the Pharmacy Benefit Management Institute Annual National Conference, Kessler explained that plans with historically high ingredient costs and low dispensing fees will see this dynamic flip. Dispensing fees are expected to rise, while ingredient costs will fall as pricing aligns more closely with the actual acquisition cost.
This change stems from the CAA’s mandate for greater transparency in price structuring, resulting in a substantial increase in data management compared to legacy pricing models. The act requires PBMs serving group health plans to pass through 100% of rebates, fees, and manufacturer compensation and provide detailed reports on drug pricing, spread pricing, and spending at the plan level.
For plans already dealing with pricing complexity, the cost-plus environment introduces prices that can fluctuate daily or monthly. This adds another layer of tracking and reconciliation for employers.
Kessler warned that the transition won’t be smooth. Significant changes in the pharmacy industry often bring an initial period of adjustment. PBMs face challenges as they manage new reporting requirements and plan for the impact of cost-plus arrangements on price movements.
