A proposed House bill is drawing attention across the pharmacy benefits industry, and for good reason. H.R. 7895, the PBM Kickback Prohibition Act, points to the direction of emerging regulatory expectations for PBM procurement. Although the bill has not yet been enacted, it is already influencing how brokers, consultants, and plan sponsors are thinking about compensation transparency, independence, and fiduciary accountability.
Understanding the bill, its implications, and the expectations it sets for the market is important for organizations evaluating or overseeing pharmacy benefits.
What PBM Kickback Act Would Do
Introduced on March 12, 2026, H.R. 7895 would amend the Employee Retirement Income Security Act of 1974 (ERISA) to prohibit certain compensation arrangements in the PBM marketplace.
Specifically, the bill would bar PBMs and their service entities from paying referral-based compensation to intermediaries, whether directly or indirectly. That includes brokers, consultants, and advisors involved in recommending or facilitating the selection of a particular PBM to plan sponsor clients. The intent of the bill is to reduce potential conflicts of interest that could affect the PBM selection process.
The bill has not yet been enacted, but current indications suggest a meaningful probability of passage, with implementation potentially beginning as early as 2028.
How This Fits the Broader Pharmacy Regulatory Landscape
H.R. 7895 builds upon existing PBM legislation focused on transparency that has been gaining momentum in Washington.
The Consolidated Appropriations Act of 2026 already requires disclosure of direct and indirect compensation across PBMs, brokers, TPAs, and other service providers. H.R. 7895 goes further by targeting the incentive structures behind those compensation arrangements.
Taken together, these developments point toward a consistent regulatory direction: greater transparency in how intermediaries are compensated, stronger oversight of PBM procurement, and clearer expectations around independence. Plan sponsors and brokers should treat this as a sustained trend rather than a one-time legislative event.
Why It Matters
As compensation arrangements come under closer examination, the ability to demonstrate objectivity within pharmacy benefits is more important than ever. Plan sponsors and their legal and compliance teams will increasingly expect documentation of how advisory relationships are structured, what fees are paid by whom, and how PBM recommendations are made.
The proposed PBM Kickback Prohibition Act bill increases scrutiny on arrangements where referral-based incentives may exist, even if those arrangements have not historically been examined closely. It also creates opportunity for brokers who can demonstrate a process that is transparent, well documented, and independent of PBM-related compensation incentives.
Practical questions brokers should prepare to answer when it comes to supporting PBM procurement:
- Are your compensation arrangements fully disclosed to clients?
- Do you receive any direct or indirect payments from PBMs related to plan sponsor business?
- Is your advisory process clearly documented for regulatory and fiduciary review?
These questions can help assess whether current processes align with growing expectations for transparency and documentation.
What Plan Sponsors Should Evaluate
For plan sponsors, the bill reinforces expectations already embedded in fiduciary responsibility: that PBM selection and oversight should be conducted through a process that prioritizes member and plan interests over intermediary incentives.
This means evaluating not only the PBM contract itself, but the process through which that contract was reached and the way it is overseen.
Areas to assess:
- Advisor compensation structure: Understand how your broker or consultant is compensated, and whether any arrangements tie their fees to PBM placement or volume.
- Disclosure completeness: Review the compensation disclosures currently in place under the CAA 2026 and assess whether any gaps remain.
- Selection process documentation: Confirm that the PBM evaluation and selection process is documented, competitive, and grounded in plan sponsor interests. An independent procurement process, free from PBM referral incentives or compensation, can help demonstrate that PBM recommendations were evaluated objectively.
- Ongoing oversight: Ensure that your oversight approach includes independent visibility into claims, contract compliance, and pricing accuracy over time.
The Direction of the Market
Regardless of whether H.R. 7895 passes in its current form, the underlying shift it reflects is unlikely to reverse. Regulators, employers, and plan members are increasingly scrutinizing how pharmacy benefit decisions are made, as well as how related compensation and incentives are structured.
For organizations evaluating or managing PBM arrangements, now is an appropriate time to review advisory relationships, compensation disclosures, and procurement processes against the standards this legislation anticipates.
