Most Favored Nation, PBMs, & Patient Access: A Guide
States Take the Reins on PBM Reform Amid Federal Inaction
As frustration mounts over the lack of federal action, states are increasingly stepping in to regulate Pharmacy Benefit Managers (PBMs), aiming to curb practices that may prioritize profits over patient well-being.
The Growing State-Led reform Movement
The pharmaceutical landscape is a complex web, and at its center frequently enough sits the Pharmacy Benefit Manager (PBM). Thes entities act as intermediaries between drug manufacturers, pharmacies, and health insurers, managing prescription drug benefits. However, a growing chorus of voices, including industry experts and state lawmakers, are raising concerns about the impact of PBM practices on drug costs and patient access.
“The states are getting so frustrated by lack of meaningful reform at a federal level that they’re basically taking matters into their own hands and trying to get something across the goal line for that subset of patients that they know state law will impact,” explained a source familiar with the matter. This sentiment underscores a significant trend: states are becoming the primary drivers of PBM reform.
Arkansas’s Bold Move: Banning PBM Ownership of Pharmacies
A recent example of this state-led initiative is a bill passed in Arkansas that prohibits pbms from owning pharmacies within the state. This legislation directly addresses concerns about vertical integration within the healthcare system.
Understanding Vertical Integration and Its Implications
Vertical integration occurs when a single entity controls multiple stages of the supply chain. In the context of healthcare, this can mean a health plan owning a PBM, which in turn owns pharmacies. Critics argue that this model creates inherent conflicts of interest.”What laws, like the Arkansas one, are trying to address is the vertical integration where a health plan owns a PBM and pharmacies, and they can choose the drug a patient gets and where they fill their prescription with an eye more toward profits than patient outcomes,” noted an industry observer.
This arrangement can lead to PBMs steering patients towards pharmacies they own,perhaps limiting patient choice and influencing prescription fulfillment based on financial incentives rather than the best interests of the patient.
The “Rebates to Fees” Concern
The shift from manufacturer rebates to patient fees is another area of concern. As one expert put it, “That, to me, isn’t good patient care, and I fear that yesterday’s rebates are today’s fees, and tomorrow it’s going to be something else, and this vertically integrated model is going to continue to evolve to the detriment of patients.” This suggests a potential for pbms to find new ways to generate revenue that may not align with improving patient affordability or outcomes.
Federal Efforts and the Path Forward
While states are actively pursuing reform, federal efforts to address PBM practices have also been a topic of discussion. Past administrations have explored various models aimed at reducing prescription drug costs. As an example, an executive order in 2020 sought to tie Medicare drug payments to international prices, a move intended to lower costs for American patients. Another initiative focused on a “Moast Favored Nation” drug price model, aiming to align U.S. prices with those in other developed countries.However, the pace of federal reform has been slow, leaving many states feeling compelled to act independently. The Arkansas law, and others like it, represent a proactive approach by states to tackle issues they deem critical for their residents’ health and financial well-being. As this trend continues, it will be crucial to monitor the impact of these state-level regulations on the broader pharmaceutical market and, most importantly, on patient care.
References
- bonavitacola J. Trump executive order could reduce pharmaceutical costs by 59%. AJMC®. March 12, 2025. Accessed July 11, 2025. https://www.ajmc.com/view/trump-executive-order-could-reduce-pharmaceutical-costs-by-59-
- Trump management announces prescription drug payment model to put American patients first. CMS.News release. November 20, 2020. Accessed July 11, 2025.[https://wwwcmsgov/[https://wwwcmsgov/