Episode 3 –  Appropriations Bill, FTC Settlement and TrumpRx Updates: What We Know So Far

Mike Stull (0:09)

It’s Mike, it’s Madison, it’s Health Care Headlines, and holy smokes, a lot has happened since we last recorded, I guess before the end of the year. So it’s hard to believe January’s passed, but here we are. Don’t have all the answers to what’s happening out in the PBM marketplace, but let’s share what we know.

So like I said, a lot going on. Where would you like to start?

Madison Connor (0:39)

Yep, absolutely. Tons going on this week. Let’s start with the government spending bill, the Consolidated Appropriations Act of 2026.

Mike Stull (0:47)

Yeah, a lot in there affecting Medicare, Medicaid, but for the sake of our brief updates, as we try to keep them, let’s focus on what’s happening in the commercial space.

Madison Connor (1:00)

I think that makes sense. So a couple pieces geared towards PBMs that will have an impact on commercial plan sponsors. I do want to just take a step back and say that Congress has been working on this PBM package for over three years.

So somewhat very shocking that it made it across the finish line, was included. I mean, we almost got very close to this being included the end of 2024, and then it wasn’t. But as far as provisions within this bill, some of the requirements are that the PBMs must pass through 100% of rebates to plans.

There are also mandatory disclosures by the PBMs to plan sponsors, and these disclosure requirements have real teeth. So reporting on spread pricing revenues, net pricing, rebates, any revenue that was collected in connection with downstream affiliates, such as mail order pharmacies, specialty pharmacies. And then lastly, compensation that’s paid either directly or indirectly by the PBMs through rebates to brokers, consultants, and other planned service providers.

Mike Stull (2:10)

So you talked about having teeth, and a lot of times the ability to really have an impact is dependent on the definition. And when it comes to rebates, the definition definitely matters. So do they actually define rebate?

Madison Connor (2:27)

Good question. It is all in the definitions, and rebates are not defined in this bill clearly. So the bill says that the entity providing PBM services has to remit rebates, fees, alternative discounts, and other remuneration.

But it is not clear if that is what the manufacturers, the GPOs get through the manufacturers, or if it’s what the PBMs receive from the GPOs. So there is a provision in the bill that says that GPOs have to remit rebates to PBMs in a timely manner so that PBMs can comply with this section. But at this point, I don’t believe that it is clearly defined that manufacturer administrative fees are included in the definition of rebates here, which is a myth.

Mike Stull (3:12)

Yeah. And as far as the PBM disclosures go, do we know what the impact those provisions will even have?

Madison Connor (3:19)

I think, again, this really depends on the definition. So we’ve seen a host of transparency disclosures required by federal law over the last six, seven years. And in many cases, we’re still waiting to see what the impact will be.

I like to always mention that transparency and coverage rules were passed in 2021, and they’re still not fully implemented by the departments. But what is different about these particular requirements is that they’re disclosures directly by the PBMs to the plan sponsors. So it’s not public disclosure of information.

It’s not aggregated disclosure of information. It is directly to the plan. So you would think that it’s that plan sponsor specific data.

But again, this will depend heavily on the implementing rules drafted by the regulatory agencies as we see these requirements fully implemented.

Mike Stull (4:12)

Excellent.

Madison Connor (4:14)

We’re still digesting this, and this is a relatively recent development, and we will continue to monitor this as some of these requirements won’t even go into effect until 2029. That’s when the rebate pass-through requirements take effect. But based on what we know so far, Mike, do you see any major changes to the way that Employers Health is doing business as a result of this bill?

Mike Stull (4:38)

Yeah, not a lot. Obviously, the definition of rebate, how it’s ultimately defined, will decide whether the way that it’s handled today, not just in our deal, but really across the industry. If it ends up being defined as what the GPO collects from the manufacturers, I think that would impact a lot of people.

If it’s simply what the PBM collects from the GPO, then I think that’s pretty much in line. I think the disclosure of broker and consultant compensation is something that the industry is going to have to deal with. There’s a lot of large consultant collectives that are out there, and so that is going to be a pretty big change.

And it’s something that we’re going to see, not just in the appropriations bill, but we’ll see it across other regulatory and other legislative efforts, whether it’s at the state level or the federal level as well. In fact, as we think about the FTC decision with Express Scripts, which I know we’ll talk about here in a minute, we’ll see this topic come back up.

Madison Connor (5:44)

Absolutely. Well, moving along, because these are benefits bites, in other news, Trump Rx was launched last night.

Mike Stull (5:51)

Huge, some say.

Madison Connor (5:55)

Yep, there was a countdown all day on the website with the hours, minutes, and seconds until the launch, and so I did peruse the website yesterday evening and encourage you all to do the same. But there are a few different ways that those direct-to-consumer prices are approached on the website. In some cases, there’s a coupon listed whereby you can present that coupon directly to a list of participating pharmacies, which are also included on the website.

And then in other cases, the website will link you directly to the manufacturer’s website where you’re able to access those Trump Rx Most Favored Nations pricing. But do like to put a reminder out there that this website is not buying and selling drugs directly, working with existing manufacturer direct-to-consumer frameworks, and also very clearly spelled out on the website in more than a few instances is the fact that this pricing is only available to cash-paying customers and does not work in conjunction with commercial insurance.

Mike Stull (6:55)

Excellent. Well, I know one of the other big headlines this week was the FTC settlement with Express Scripts. Madison, talk to us a little bit about how this even came about.

Madison Connor (7:08)

Yes. For context, we’re talking about the Federal Trade Commission’s major lawsuit against the Big 3 PBMs over insulin pricing. This was filed in September of 2024, I believe.

And you’ll recall that during that time, there was a handful of interim staff reports released by the Federal Trade Commission releasing its findings on its investigation into the Big 3 PBMs. So this settlement here is a settlement with Express Scripts directly, not with Optum or CVS Caremark. And the action will continue between those two parties as well. But for now, ESI has reached the settlement.

This happened while Mike and I were both on a plane traveling somewhere, and we were able to break it down immediately afterward. Mike here, what are some immediate takeaways you see from the settlement?

Mike Stull (7:57)

Yeah. So I get a lot of questions right now about, well, you don’t use Express Scripts. We use CVS.

We use Optum. What are they thinking? And I think that while this is Express Scripts specific, and it aligns with the rebate less model that Express Scripts promoted in Q4 of 2025.

So not a lot of changes in terms of what’s in the settlement and what Express Scripts had already said that it was going to do for clients moving forward. But I think there are some themes that we’ll continue to see regardless of what CVS or OptumRx decide to do. There are some themes, and those themes include things like eliminating spread pricing and going to transparent pricing, which a lot of the state legislatures have moved in that direction.

A lot of the marketplace has moved in that direction already. 100% pass-through of rebates. Again, how do you define rebates?

Ensuring that plan participants are sharing in the point-of-sale rebate or sharing in the rebate through the point-of-sale application of those rebates. So that will have a big impact on plans that utilize rebates for different types of setting their cost-sharing levels, whether it’s their deductibles or their max out-of-pockets, or setting premiums. So that’s something that they need to keep in mind.

Delinking PBM compensation from the price of the drug, and that’s something that is already happening, or it was part of the Appropriations Act. I should say it’s something that will happen in the Medicare space. Yep.

And so we expect to see that come down into the commercial space. And then finally, there’s that broker and consultant compensation disclosure, again, showing up in this FTC requirements.

Madison Connor (10:04)

So is this a requirement, or is there some optionality for plans to adopt this model?

Mike Stull (10:10)

Yeah, specifically for Express Scripts. Express Scripts has agreed that it will apply this to Cigna’s fully insured book of business. It will also, as I said, make this the standard offering that it provides to self-funded plan sponsors.

And plan sponsors will have the ability to opt out and use a different model. But if they do, there is a template acknowledgement that the employer will have to sign that says that it understood the opportunity to take the standard offering, and specifically what the benefits of things like applying the rebate at the point of sale would mean for lower plan participant prices, and sign off that they understood that, but opted out and decided to take a different approach.

Madison Connor (11:01)

I wonder how plan sponsors will feel about that.

Mike Stull (11:03)

And again, it is a template acknowledgement that’s part of the agreement, so there’s no going back to your legal department and having them massage the language.

Madison Connor (11:14)

So you asked me earlier, we always have to ask this question, are rebates defined in the settlement?

Mike Stull (11:21)

It does define rebates, but it leaves out a big piece of rebates, which is the manufacturer administrative fees. So we think, you know, if you’re going to define rebates in your settlement, you should include that in there, probably a big miss for this particular settlement.

Madison Connor (11:39)

Well, bottom line it for us, Mike, what impact is this going to have on plans that decide to adopt this model?

Mike Stull (11:45)

Yeah, I think just a few things. So first of all, I mentioned point of sale rebates that will certainly impact plan sponsors’ decision-making. I think the other thing that plan sponsors should be thinking about is what happens if Ozempic lowers its price, or what happens if Wegovy or ZepBound lower their price for those that cover weight loss, because those are high-priced drugs, they have huge rebates on them.

And so you’re going to see if that were to happen, you would see upfront costs come down, but back-end rebates come down as well. So it would actually be a great thing, I think, for the marketplace and for participants, and it would clear up a lot of confusion about, well, why is the direct-to-consumer price this, but the price under my health plan is this? It would get rid of all that.

So it’s actually something that I’m hoping happens, but plan sponsors need to be ready for it, need to have scenarios in terms of thinking about their budget for next year and cash flow. And again, how are you going to set your deductibles, your max out-of-pockets, your premium contributions if these things happen to change? I think the other piece, again, the broker and consultant reporting is something that I think would impact a lot of plans.

It may not be something that they necessarily think about today, but it can be a big eye-opener. There’s a lot of litigation. Now, this wasn’t PBM, but voluntary benefits.

A lot of litigation dropped. Was that in January or was that December? I forget.

Madison Connor (13:30)

I think it was late December. A lot happened in late December.

Mike Stull (13:34)

Yeah, but certainly this topic, as I said, is not going away. It’s something that both consultants and employers are going to have to take a look at. At the end of the day, though, so you said bottom line it.

At the end of the day, Cigna had an earnings call this week. It was asked the question, what’s going to happen to profit margins in the future? It acknowledged that in 2026, there is about 500 to 600 million that they’re going to have to eat.

It has to do with renewing their two biggest clients, which is Prime Therapeutics and Centene, which operates Medicaid programs around the country. The rest of it has to do with contracting for this new model, but they expect that long-term profit margins will be very similar, if not better, than what they are today.

Madison Connor (14:28)

What do you always say?

Mike Stull (14:29)

As I always like to say, it doesn’t mean that you’re going to pay less. It just means that you’re going to pay differently. Anything you’d add?

Madison Connor (14:42)

I think that some of these, what may seem like groundbreaking developments within the FTC settlement, are actually now requirements through federal law. It’s important for consultants, plan sponsors, stakeholders to keep in mind that none of these regulatory efforts or legal efforts are happening within a vacuum. While there may be requirements within the settlement to do your transparency and coverage reporting, pass 100% of rebates through the plan, as well as some of those broker compensation disclosure pieces, those are now requirements by federal law.

Reading those together, we’ll continue to watch how this shapes the industry. I think some other items that we’ll continue to monitor and watch for will be the final proposed rules for transparency and coverage rules to implement the prescription drug machine-readable file requirements. That’ll be interesting to see how this plays in as well.

Then we cannot ignore that two weeks ago, the Department of Labor dropped new transparency fee disclosure proposed rules, so not yet finalized, for brokers, consultants, and other planned service providers. They toyed at the idea of greatly expanding the definition of planned service providers that are covered by these requirements. It’ll continue to be interesting to see how this develops and how it continues to shape the way that different players in the industry are compensated.

Mike Stull (16:08)

Yeah, and the nice thing for Employers Health, it’s not going to impact the way that we do business today. Our fees are all in the contract, fully disclosed, very transparent, and we don’t expect that to change.

Madison Connor (16:22)

Absolutely.

Mike Stull (16:24)

All right, so that’s it for this episode of Health Care Headlines, but I’d be remiss if I didn’t close us out with a cheap plug, shameless plug.

Madison Connor (16:35)

We love those.

Mike Stull (16:36)

Yeah, shameless plug for Health Care Headlines Live.

So Madison and I will be doing a live version of our chat at our Annual Benefits Forum. It will be March 24th and 25th. Our session specifically right now is targeted for March 24th in Columbus.

Registration is live and you can check the description in the episode notes for a link to get registered.

Madison Connor (17:08)

We would love for you to come join our conversation.

Mike Stull (17:11)

I think it’ll be the highlight of the two-day experience.

Madison Connor (17:14)

I bet so. Keep telling yourself that.

Mike Stull (17:18)

You get to see the behind-the-scenes hair and makeup that I have to go through. Don’t worry about Madison, but that I have to go through. But thank you again for joining us and we’ll see you on our next episode.

Madison Connor (17:30)

Thanks.