After Ohio’s 2018 audit, the state mandated the termination of all contracts with PBMs engaged in spread pricing. Going forward, PBMs contracted by the state would be required to practice pass-through pricing, ensuring they simply pay out claims to pharmacies on behalf of payers without profiting from the transaction.
Thirteen other states, such as New York, Louisiana, Kentucky, and Texas, have since followed Ohio’s lead by either requiring pass-through pricing or adopting some variant of spread pricing reforms. As have many self-insured employers who now require pass-through pricing.
Earlier this year, Congress passed PBM reforms at the federal level as part of the 2026 spending bill. This legislation aims to delink compensation from drug prices in Medicare prescription benefits, require 100 percent pass through of rebates for employer health plans, increase transparency regarding PBM compensation, and create federal standards for pharmacy contracts.
The spending bill does not address vertical integration. It also does not include the broad Medicaid managed-care PBM reforms — such as nationwide spread pricing bans and pass-through reimbursement requirements — proposed in other legislation.
And being that these changes don’t take effect until 2028–29, there’s still plenty of time for the pharmaceutical industry and its profiteers to mount legal challenges, neuter reforms, or devise alternative means of profit.
As practices like spread pricing and rebate schemes have invited more public scrutiny, PBMs have shifted their profiteering to elsewhere in the system. In the case of rebates, PBMs have turned their attention to a cornucopia of other incentives, like administrative fees, data fees, market-share incentives, formulary access fees, volume discounts, GPO fees, conversion incentives, and performance guarantees that can be tacked onto rebate agreements. This dizzying profit structure has turned reform attempts into a grim game of Whac-A-Mole.
“Every dollar that comes through the health care system ultimately comes from one of our pockets,” said El-Sayed. “They are getting extraordinarily rich providing no actual service that cannot be offered better by the government.” In his campaign for Senate, El-Sayed is proposing a different strategy to fight back against these powerful intermediaries: banning them outright.
El-Sayed’s proposed “Ban the Middleman Act” would phase out PBMs and shift their functions to more transparent public and independent systems, including expanded federal drug price negotiation and independent boards to guide coverage and pharmacy access — with the goal of reducing drug costs for patients by cutting out profit-seeking middlemen.
“We need guaranteed health insurance from the federal government, from cradle to grave, without copays, premiums or deductibles,” said El-Sayed. “And the advent of PBMs exists because of the inefficiency of the private health insurance on its own terms. So even as we move toward Medicare for All, we can clip off this wasteful, borderline fraudulent system that just skims money off the top of every transaction.”
The argument PBMs make in their own defense is that the incentive structure they’ve created still ultimately lowers costs for patients. But in practice this hasn’t panned out. Over the last quarter century, nearly every measure of prescription drug costs shouldered by patients has increased dramatically, while premiums have risen and plans have moved toward higher copays, deductibles, coinsurance, and specialty-drug tiers.
As long as we remain locked into this predatory health care system, which privileges profits over all else, it will continue to be working people who pay the price.