PBMs Under Fire as Bill Targets Opaque Pricing Models
CVS, Cigna, and UnitedHealth pivot to transparent, fee-based systems as lawmakers move to ban spread pricing and mandate rebate pass-throughs.
A rising tide of bipartisan legislation is forcing a dramatic overhaul of the nation's powerful pharmacy benefit managers (PBMs), with industry giants like CVS Health, Cigna, and UnitedHealth Group scrambling to adapt their business models ahead of sweeping reforms.
A proposed 2026 spending bill has intensified the pressure, aiming to dismantle the opaque pricing structures that critics argue have inflated prescription drug costs for years. The bill’s key provisions—a federal ban on “spread pricing” and a mandate for all drug manufacturer rebates to be passed directly to health plans and employers—are at the center of the legislative push.
Spread pricing occurs when a PBM charges a health plan more for a drug than it reimburses the pharmacy, keeping the difference as profit. The elimination of this practice, coupled with rules forcing PBMs to hand over the lucrative rebates they negotiate with drugmakers, represents a fundamental threat to their traditional revenue streams. The reforms have been championed by pharmacist and pharmacy organizations, which issued a commendation for the spending bill's provisions, urging its swift passage.
This federal push mirrors a wave of state-level actions and pending bills, such as the Pharmacy Benefit Manager Reform Act, which have created an environment of regulatory inevitability. Rather than wait for the legislative hammer to fall, the industry's largest players are proactively pivoting their strategies.
CVS Health, a healthcare behemoth with a market capitalization of nearly $100 billion, has been at the forefront of this shift. The company is transitioning its commercial clients to its CVS CostVantage model, which uses a more transparent formula based on the cost of the drug plus a set markup and a flat service fee. The move is a direct response to client demands for more clarity and predictability in drug spending.
Its competitors are following suit. Cigna's Evernorth health services unit and UnitedHealth Group's Optum Rx, which together with CVS’s Caremark control roughly 80% of the PBM market, are rolling out their own versions of “cost-plus” or fee-based pricing models. UnitedHealth, a $300 billion titan in the healthcare sector, is similarly shifting towards a model that delinks its revenue from drug prices.
“The entire PBM industry is in a period of strategic adjustment,” one industry analyst noted. “The old model is on its way out, and the race is on to prove who can deliver the most value and transparency to employers and health plans.”
The market has reacted with a mix of optimism and caution. Shares of UnitedHealth have shown resilience, climbing 2.67% in recent trading to $347.45. CVS Health also saw a 2.06% gain, trading at $81.74. Cigna, with a market cap of over $72 billion, rose 1.25% to $274.62. However, both CVS and Cigna remain well below their 52-week highs, reflecting investor uncertainty during this transitional phase.
Despite the operational overhaul, many analysts believe the integrated healthcare models of these companies position them well to adapt. Analyst ratings for all three firms remain broadly positive, with a strong consensus of 'Buy' and 'Strong Buy' recommendations. The consensus analyst target for CVS, for instance, sits at $94.96, suggesting confidence in its ability to navigate the regulatory changes.
The strategic pivot is not without risk. It requires a massive operational lift and a re-education of the market. Yet, the alternative—facing punitive legislation and a loss of trust from clients—is far more perilous. By embracing transparency, PBMs hope to redefine their role in the healthcare ecosystem, shifting from controversial intermediaries to essential partners in cost management. The success of these new models will determine not only their own financial future but also the trajectory of prescription drug costs for millions of Americans.