Congress fixed pharmacy networks. Health care provider networks are next

On February 3, the Consolidated Appropriations Act 2026 became law. This bipartisan effort to fund most of the government for the remainder of the fiscal year also includes important reforms affecting pharmacy benefits managers (PBMs). It won’t take full effect until 2029, and different rules will apply to Medicare plans and group health plans. But generally, its sweeping reforms will ban spread pricing, require pass-through of rebates, and improve reporting, auditing and enforcement. The reforms originated in a December 2025 bill introduced by Sen. Ron Wyden (D-OR) and Sen. Mike Crapo (R-Idaho) whose purpose was “to fix market distortions and increase transparency in federal prescription drug programs to lower patient costs.”

One of the market distortions the law also addresses is how PBMs operate their pharmacy networks in ways that restrict competition and benefit their bottom lines. PBMs do this in part by restricting which pharmacies can participate in PBM’s pharmacy network.

There’s ample reason for Congress to be concerned about this.

Three of the largest health insurance companies, through their affiliated PBM’s (Express Scripts, Caremark and OptumRx), control nearly 80% of prescriptions filled. Each of these PBMs operates a pharmacy network that determines the payments made to each participating pharmacy. Often, when firms with monopoly power operate an essential network, they exploit the network to enhance their own profitability at the expense of those buying goods and services through the network.

In the case of pharmaceuticals, this includes PBMs favoring some network pharmacies over others by paying PBM-owned pharmacies more than independent pharmacies for the same drugs, or by steering patients away from independent pharmacies to purchase medications from the PBM’s own pharmacies and mail order services. These are classic examples of a network operator stifling competition for its own gain.

In the business of health care, PBM pharmacy networks are not the only types of provider networks where this happens. The major health care provider networks that are part of most health plans also permit practices that harm competition and small providers. To address this, Congress should also enact legislation that would apply to the health care provider networks operated by the major insurance carriers.

Many employers, unions and other plan sponsors desire employee health plans that would take advantage of federal price transparency regulations, enabling their plans to reward fair-priced providers and incentivize plan members to consider high-value providers when making health care choices. But non-competitive contracting restrictions imposed on the networks by large hospitals and health systems limit the ability of plans to reward fair-priced in-network providers. These contractual restrictions include prohibitions on reviewing, auditing and negotiating certain provider claims before they are paid by the plan; restrictions such as anti-tiering and anti-steering provisions that prevent plans from placing fair-priced providers on a more favorable tier of coverage or incentivizing members to use fair-priced providers; and finally, “all-or-nothing” clauses that require all hospitals within a health system to be included in a provider network even if a plan only seeks to include specific hospitals that best meet the needs of the plan members.

Regulation of all essential distribution networks to ensure that they are transparent, non-discriminatory and competitive is fundamental to the functioning of our economy. Congress should take action to prohibit abuses and protect American employees and families who are the ultimate purchasers of the services sold through our essential healthcare provider networks.

As a nation, we’ve been here before. And we know what to do.

A century and a half ago, railroad networks wielded enormous economic and political power in ways that harmed farmers, businesses and entire communities. Like today’s health care industrial complex, they charged different rates to different customers for the same service. Price discrimination enabled large corporations to receive secret rebates, while small farmers and businesses paid higher prices. But in 1887, as a result of public outrage against these abuses, Congress took action to eliminate rate discrimination and impose requirements for transparent, published rate schedules.

During the 1900’s, AT&T’s dominance of the US telephone network gave it enormous discretion in setting rates for different services in different regions. Eventually, the FCC forced telephone monopolies to open their networks and share their lines with independent long-distance services (and later, with high-speed Internet providers), paving the way for consumers to access these services at affordable prices.

Finally, three television broadcast networks once owned and controlled nearly all prime-time programming on American television — to the detriment of the creators and producers of the content. In 1970, the FCC implemented regulations to foster competition, and independent television production companies thrived and prospered as a result.

Critically, the regulations that created competition for railroads, telecommunication and television all led to new innovations and business models that eventually out-competed the once-dominant behemoths. In other words, it worked.

Congress should adopt legislation to similarly crack open our essential health care provider networks and catalyze competition and innovation. This is an important step on the path away from our dysfunctional health care economy and towards a system that provides real value to all health care purchasers.

Jim Jusko is chief strategy officer and general counsel at Excel Health Plans.