The Trump administration is intensifying efforts to crack down on companies that manage drug benefits for most Americans.

Why it matters: Pharmacy benefit managers are again in the administration's crosshairs over allegations of opaque business practices and their ability to manipulate markets at the expense of patients.

• The latest move comes after Congress passed new transparency requirements and changed how the firms get compensated.
• But it's not clear whether it will significantly eat into PBMs' revenues.

Driving the news: The Department of Labor yesterday finalized a rule requiring the PBMs to disclose semiannually what they earn for negotiating drug prices on behalf of employer health plans, or whenever they renew or extend an agreement.

• Companies including CVS Caremark, Express Scripts and Optum Rx will have to detail payments from drug manufacturers, instances of "spread pricing" when a health plan pays more for a drug than the amount reimbursed to the pharmacy, and situations where the total cost of the drug is less than a patient's copayment.
• Health plans can audit the PBMs at least once a year. And PBMs have to provide an explanation if they make 5% or more above what they estimated they would.
• The rule stems from President Trump's executive order on lowering drug prices and follows a series of Federal Trade Commission settlements with leading PBMs earlier this year over alleged anticompetitive practices.

What they're saying: "This is a win for every American worker who has ever paid too much at the pharmacy counter," said Labor Secretary Keith Sonderling. "For years, PBMs have operated in the shadows, pocketing hidden fees while workers and employers were left in the dark."

• Officials pointed to projections that employers and workers are shouldering some of the steepest health cost increases in decades. A KFF survey showed employees' share of family coverage is up 9% from 2025.
• But the Pharmaceutical Care Management Association, a trade group for PBMs, said the rule could lead to higher patient costs and less competition, by creating another transparency reporting system on top of the congressionally mandated changes.
• "It is a solution in search of a problem," said the group's CEO, David Marin.

Between the lines: The rule takes effect in July and applies to self-insured group plans with more than 100 participants that pay their own health claims. That effective date is a year before the PBM changes that Congress passed are due to take effect.

• Backers of the rule such as Transparency Rising, a trade group representing smaller PBMs, said the requirements have teeth because disclosure is tied to ERISA rules and health plan fiduciaries have to report PBMs that fail to provide the information.
• But the rule covers fewer plans than originally envisioned, and there are no direct restrictions on PBM pricing, compensation from spread pricing, or on retaining manufacturer rebates, Raymond James analyst Chris Meekins wrote in a note.
• "The key financial question remains whether greater employer visibility leads to lower retained PBM compensation or simply changes how that compensation is charged," Meekins wrote.

What we're watching: The rule still could be challenged in court.

• Some PBMs have already started restructuring their businesses as part of the FTC settlements and in anticipation of the mandated changes.
• Meanwhile, some employers are cutting ties with the biggest PBMs and striking deals with smaller rivals to manage their drug costs — and signals point to more companies considering a switch.

We've written about how AI thus far has been much better at discovering drugs than developing them, which is a bit like being great at grocery shopping but helpless in the kitchen.

Driving the news: Formation Bio also sees the stubborn bottleneck and just raised a $600 million "drug development accelerator" fund to help address it.

The big picture: This effort is unusual.

• Formation Bio is not a venture capital firm. It's a biotech startup backed by some of the world's most successful and deep-pocketed investors — including a16z, Sequoia Capital and Thrive Capital — and was valued at $1.7 billion when it last raised funding in 2024.
• But it is definitely reminiscent of a venture capital fund, with Formation Bio serving as general partner (including carried interest) and the limited partner base consisting mostly of university endowments, foundations and hospitals.
• CEO Ben Liu says that his goal is to build a large pharma company, on par with an Eli Lilly or Sanofi, and that this structure will help Formation Bio "take more shots on goal" without having to risk diluting existing shareholders by raising additional equity. In fact, Liu says Formation has no plans to do another venture round.

Zoom in: The fund will buy molecules and drug programs that Formation will then help bring through development.

• Formation's key innovation, Liu believes, is that it's using AI and centralization to create a more efficient clinical research organization. Specifically, he argues that nearly half of drug development costs come from contract research organization margins — driven by billable hours — with Formation believing it can reduce spend by between 30% and 50%.
• "CROs have perverse incentives," Liu says. "We can't really save on manufacturing, which is expensive, but we can cut a lot of the redundant headcount, extra site visits and other things that cause clinical trials to cost so much."

Look ahead: Each company acquired by the fund will become its own NewCo, with any early successes to be sold to Big Pharma. Basically the latest iteration of the hub-and-spoke model.

• "That's only a short-term strategy to lower our cost of capital," Liu explains. "We do think we've found a category that we would hold onto, which we'll share in a couple quarters."

The bottom line: Curing disease is becoming AI's holy grail, the inarguable good that could offset the feared bads.

• Formation and other CRO startups may or may not help crack the code. But, to borrow a phrase from Liu, it's worth taking more shots on goal.

Judge strikes down Trump administration's definition of "medically frail" in Medicaid work rules (Politico)

Our take: A court's rejection of the requirement that chronically ill Medicaid beneficiaries prove they're too frail to work is likely the start of a long legal battle. But it sends a signal to patients worried about staying on the program and could reduce projected coverage losses.

Millions use antidepressants. We still don't understand how they work. (NYT)

Our take: For all the political attention antidepressants are getting, it's worth remembering they're still a scientific mystery — as is much of the psychiatric medicine field.

Your phone knows you're at the doctor, and data brokers are profiting from it (WashPost)

Our take: It's news to us that brokers can sell a phone's location data to companies that want to advertise unproven treatments. What could possibly go wrong?