Congress Take Aim at Alleged Kickbacks in Hearing on PBMs

House lawmakers launched a bipartisan attack on pharmacy benefit managers during a hearing Wednesday, focusing on an allegation that some of the consultants hired by employers to help them choose drug-benefit managers are being paid by the very companies they are supposed to evaluate independently.

During the hearing hosted by the House Education and Workforce Committee’s Subcommittee on Health, Employment, Labor, and Pensions, lawmakers described PBMs—the companies that negotiate rebates, manage formularies and decide which pharmacies and drugs are favored in many insurance plans—as powerful intermediaries whose business practices have become too opaque for employers, workers and even regulators to follow.

Witnesses said the problem is compounded when brokers or benefit consultants, who present themselves to employers as neutral advisers, receive fees or per-prescription payments from PBMs in exchange for steering business to those PBMs.

The accusation came up during a hearing panel, titled “Profits Over Patients: The PBM Business Model Under Scrutiny.” It is the crux of a Republican bill, the PBM Kickback Prohibition Act, introduced last month by Representative Rick Allen, R-Georgia, the subcommittee chairman. Allen said the measure would bar PBMs from paying brokers or consultants to direct employer health plans toward preferred PBMs.

“It seems that instead of placing the plan sponsor with the best PBM, it’s more about placing the PBM with the plan sponsor who pays the consultant the most,” said Hannah Anderson, senior director of policy at the America First Policy Institute. “This isn’t theoretical. It’s affecting millions of Americans right now.”

Undermining Trust

Some of the starkest testimony focused on the procurement processes, with speakers describing the payments to large benefits brokerage firms as effectively a condition of bidding.

In one example, Chris Deacon, a health benefits consultant and founder of VerSan Consulting, cited a PBM contract that called for payments of $2.50 for each retail prescription and $7 for each mail-order or specialty prescription filled for a client’s members, an arrangement she said rewarded volume and higher-margin channels rather than lower costs.

James Gelfand, head of the ERISA Industry Committee, which represents large employers, said such practices undermine the trust companies place in outside advisers to help them manage benefits prudently. Those employers, he noted, often sponsor self-insured plans and directly bear much of the cost when workers fill prescriptions.

Previous Regulatory Efforts

The hearing underscored how the politics of drug pricing have widened beyond the pharmaceutical manufacturers that have long been Congress’s primary target. PBMs were originally hired to help health plans bargain down drug costs, but critics say the rebate system has evolved into an incentive structure that can favor expensive medicines carrying large rebates rather than cheaper alternatives, including generics and biosimilars. According to the Federal Trade Commission, the top three PBMs—CVS Caremark, Express Scripts and Optum Rx—managed 79% of U.S. prescription claims in 2023.

As a result, the FTC has sharpened its focus on PBMs. In February, the agency secured a settlement with Express Scripts over allegations tied to insulin pricing and rebate-driven formulary decisions, while separate FTC cases against the other two major PBMs remain pending. The commission has previously highlighted the ability of vertically integrated PBMs to steer patients toward affiliated pharmacies, where the prices can be dramatically higher than those of outside competitors.

The hearing came after Congress and the Department of Labor had already begun tightening oversight. In February, lawmakers enacted PBM-related provisions in the Consolidated Appropriations Act of 2026 that, among other things, require PBMs to pass through 100% of rebates and discounts to employer health plans governed by ERISA and expanded the disclosure obligations of PBMs and other service providers.

Separately, the Department of Labor proposed a rule in early February requiring PBMs and affiliated brokers and consultants serving self-insured employer plans to disclose direct and indirect compensation, including rebates, spread-pricing arrangements and pharmacy payments, to plan fiduciaries.

Disclosures in Focus

The witnesses and members of Congress also objected to many PBM practices.

Several witnesses argued that if employers cannot verify disclosures made to them by their providers, or audit the underlying claims and pricing data, legal bans on conflicted compensation may prove more effective at restricting drug costs than spreadsheets describing prices after the fact.

The hearing also revealed the limits of the emerging political consensus on the topic. Democrats on the panel argued that PBM reform, however necessary, would not by itself solve the deeper problem of high drug prices set by manufacturers. Representative Mark DeSaulnier, D-California, the top Democrat on the subcommittee, pointed to the Medicare drug-price negotiation program created by the Inflation Reduction Act and urged Congress to consider extending similar protections to people with employer-provided coverage.

Mariana Socal, an associate professor at Johns Hopkins Bloomberg School of Public Health, said during the hearing that rebate reform could curb distortions in the system, but “in isolation” would not address the underlying problem of the high price of drugs themselves.

The hearing did highlight a rare area of bipartisan agreement. Lawmakers from both parties described PBMs as middlemen whose incentives had drifted away from the employers and patients they work for, and while several rules have already sought to limit PBM influence, members of Congress seemed willing to take further steps.

As Deacon said in testimony, the health care industry is increasingly vertically consolidated, with providers, insurers, PBMs, and specialty pharmacies often under common ownership. Tracking how compensation flows among the related entities is essential for transparency.

“If you squeeze one end of the balloon, it pops up on the other,” she said. “So if you’re not catching all of those covered service providers, you will be missing something.”