New Federal Employee Health Bill Blocks Insurers and PBMs from Owning Pharmacies to Cut Conflicts of Interest

The Fair Pharmacies for Federal Employees Act of 2025 is taking aim at a giant structural problem in healthcare: vertical integration. Simply put, this bill says if you’re an insurance carrier or a Pharmacy Benefit Manager (PBM) providing coverage to federal employees, you can’t also own, run, or control the pharmacy that dispenses the drugs. This is a big deal because it directly tackles conflicts of interest that many argue drive up prescription costs.

The Middleman Problem: Disentangling PBMs and Pharmacies

For those unfamiliar, a PBM is the middleman—the negotiator. They manage prescription drug benefits for health plans, setting up pharmacy networks, negotiating prices, and processing claims. When a PBM is owned by the same company that owns the insurance carrier and the mail-order pharmacy, they have little incentive to negotiate the lowest price or include independent pharmacies in their network. This bill specifically prohibits the Office of Personnel Management (OPM) from contracting with any health plan carrier or PBM that owns a pharmacy (SEC. 2).

If you are a federal employee, this change is designed to benefit your wallet and your access to care. Right now, integrated systems often steer patients toward their own in-house pharmacies, sometimes limiting your choice of where to fill a prescription. By forcing the separation of these entities, the bill aims to create a fairer playing field. Independent pharmacies, for example, could see better contract terms and more business if PBMs are incentivized to negotiate across a wider, non-affiliated network.

Who’s on the Hook for Compliance?

This isn't just about PBMs; it's a two-way street. OPM is barred from contracting with any Qualified Carrier (the insurance company) if that carrier "owns, runs, or controls" a pharmacy. The bill also makes it clear that a PBM can’t contract with a carrier if the PBM is owned or controlled by that carrier. This is a direct hit to the business model of some of the largest players in the healthcare space who have spent the last decade aggressively merging these components.

For the affected companies—the carriers and PBMs that currently serve the federal workforce and have vertically integrated structures—they will have to restructure their relationships or lose out on those lucrative federal contracts. The bill is pretty clear on the definitions: a Pharmacy includes everything from your neighborhood retail spot to a mail-order service or specialty pharmacy (SEC. 2). While the bill's language is precise, the definition of "controls" could be where the legal battles start, as companies may try to find creative ways to maintain influence without outright ownership.

Why This Matters for Your Drug Costs

Think of it this way: if you’re buying groceries, you want the store to negotiate the lowest price from the supplier. If the store owns the supplier, they might not push for the lowest price because the profit just shifts from one pocket (the supplier) to the other (the store). In healthcare, this bill attempts to prevent that profit shift by making the PBM truly independent of the pharmacy. If the PBM knows it has to compete and negotiate with all pharmacies equally, the theory is that drug prices for federal employees should trend downward, or at least the process will become more transparent.

Crucially, the bill doesn't mess with existing antitrust enforcement powers. It explicitly states that this new restriction doesn't stop the Federal Trade Commission or state attorneys general from using their power to investigate unfair practices. This means the bill sets a new, higher standard for federal employee health contracts while leaving other regulatory tools intact to police the broader market.