By Megan R. Wilson

Listen to this briefing

• Rebate reversal: Cigna plans to phase out traditional drug rebates for many commercial plans starting in 2027, a potential industry shake-up that could pressure rivals and reignite Washington’s PBM reform fight.
• The political implication of rising costs: New inflation data show overall health costs are up 3.3 percent year-over-year, pushed upward largely by hospital and in-home caregiving costs, which deepens the political focus on affordability amid the shutdown.

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Cigna owns Express Scripts, the country's second largest pharmacy benefit manager. (Wilfredo Lee/AP)

	The Lead Brief

In a major move, Cigna is revamping its pharmacy benefits business — nixing rebates on drugs for many of its commercial plans and offering discounts right at the pharmacy counter.

Rebates have been at the center of the discussions to reform the pharmacy benefit managers, better known as PBMs. Critics say they actually drive up the cost of medicines, arguing that drugmakers raise list prices to give larger discounts in exchange for preferential coverage by an insurance plan.

Cigna will be offering up-front discounts directly to patients at the time of their purchase, which the company estimates will reduce brand-name prescription costs by an average of 30 percent for people with high deductible plans who pay the full price for their medications. Normally, a drugmaker will pay PBMs a rebate long after a drug has been purchased, some of which can then be passed on to plans or employers.

Bloomberg News first reported the announcement.

In June, CMS Administrator Mehmet Oz called it a “rebate-slash-kickback system,” arguing that the industry should do away with rebates before Congress acts on reforms. Insurers, meanwhile, have long defended rebates as essential to lowering medicine costs.

The initial changes will begin in 2027, and Cigna will expand the rebate-free model to its PBM, Express Scripts, in 2028.

Why it matters: Express Scripts is the second largest PBM in the country. Together, alongside CVS Health’s Caremark and UnitedHealthcare’s OptumRx, the three companies manage roughly 80 percent of all prescriptions in the U.S. — meaning this could be part of a larger market shift that leads to others in the industry making reforms of their own.

On Monday, Health and Human Services Secretary Robert F. Kennedy Jr. hailed the move on social media.

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“I applaud @Cigna’s announcement to align its business practices with @POTUS’s vision of empowering patients through greater transparency and lower drug prices on brand-name medicines. I urge other companies to join President Trump in putting Americans first,” Kennedy wrote in the post.

What’s next: Although the industry has been trying to make voluntary changes in an effort to stave off regulatory and legislative challenges, this could just reignite the debate over PBM reform.

Support in Congress is vast and bipartisan, but efforts have largely been scuttled by larger legislative dynamics. Many experts expect discussions about any health provisions within a year-end funding package to include measures that aim to rein in the PBM industry.

It remains to be seen how impactful the change will be — for both patients and the overall health system. The National Community Pharmacists Association, which has spent millions lobbying for PBM reform, expressed cautious optimism at the move but urged lawmakers on Capitol Hill to keep moving forward.

“The devil is in the details. We don’t know yet whether this is a genuine transformation or whether it’s a head fake to get the heat off,” the group wrote in a post on Monday. “In the meantime, we would remind our many champions in Congress that Cigna could revert back to its old ways the moment President Trump leaves office. Lasting reform requires legislation, and they should pass it this year.”

	Market Moves

New inflation data reveals that costs for most health care goods and services — eyeglasses and eye care, health insurance, nursing home and hospital care — are rising faster than the rate of inflation.

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While the overall cost of goods increased 3 percent and services increased 3.6 percent over the past 12 months, health care costs overall rose 3.3 percent — driven mostly by health care services. But more on that later.

It’s important to note that many of the health care cost figures are based on amounts — including medical claims — that are more delayed than other parts of the economy. That could mean that these numbers are poised to become even more stark over the next year.

A steady 3 percent-plus pace compounds over time, translating into meaningful increases in out-of-pocket costs and fiscal pressures for Medicare and Medicaid.

Why it matters: The data comes as Americans remain concerned about the cost of basic needs — including food, health care and housing — that a new Reuters/Ipsos poll suggests could play a major role in the midterm elections next year that will determine the balance of power on Capitol Hill.

For about 40 percent of respondents, how candidates position themselves on cost-of-living issues would be the single largest factor in their vote in 2026. More than 1 in 3 people said policymakers should be putting a main focus on health care costs in particular.

Another poll from AP-NORC published last week puts an even finer point on it: Health care is among the second most significant issue to Americans after the economy generally, with 81 percent saying that it is “extremely or very important.”

→ An interesting stat: While the poll shows, unsurprisingly, that Americans are generally more likely to trust how their own party handles health policy issues, Republicans still aren’t necessarily confident in their own party: Only 57 percent of respondents said they had trust in GOP policymakers on health care, compared to 76 percent of Democrats that said they trusted their party more.

Republicans in Congress are reportedly grappling with frustration from constituents over health care costs in town halls across the country.

We may be able to get a preview of the 2026 election playbook: In just over two weeks, voters in New Jersey and Virginia will head to the polls in gubernatorial elections. In both of them, the Democratic candidates have made affordability — including centering health care costs — a main part of their campaigns.

	Numbers Game

Now, let’s dive into the data released on Friday from the Bureau of Labor Statistics, which gives us a look at how much prices are rising on consumer goods and services over the past 12 months.

Medical services increased by 3.9 percent overall. A large portion of the cost increase is attributed to hospitals, which had an overall 5.5 percent increase over the last 12 months. Increases in costs for outpatient care rose more than inpatient care. At-home caregiving services jumped nearly 12 percent, one of the largest jumps throughout the entire economy.

→ It comes following an increase in August that marked the largest bump in cost of care in three years.

Medical care commodities, including prescription drugs and medical equipment, have costs rising much slower than the overall rate of inflation. As a category, these products increased in cost by less than 1 percent. Prescription drugs rose 1.2 percent over the last year, while nonprescription medicines — which include over-the-counter treatments and dietary supplements — actually decreased in cost by 1.8 percent.

→ Rising prescription drug costs remain a concern for employers, which are already preparing for the highest health benefit cost increase in 15 years.

Health insurance costs rose 4.2 percent — a figure that’s likely to rise throughout the next year. However, the figures for insurance costs are not reflective of consumers’ actual health premiums, but are based on how much insurers earn versus how much they pay out in benefits — a calculation economists call “retained earnings.”

Personal care products — which aren’t categorized under health care but include goods such as antiaging cream, hair loss treatments and toothpaste — are also rising (1.5 percent), though slower than the rate of inflation.

The upshot: Most medical inflation isn’t surging, but it isn’t cooling either. For payers, providers and policymakers, the persistence of a more than 3 percent annual climb suggests health care costs will keep rising faster than most other consumer prices well into 2026, especially with a continued disagreement in Congress about key health policy issues.

Job Report

Andrea Harris has become the managing director of the Health Policy Impact Lab at Yale’s Tobin Center for Economic Policy. She comes from Protect Our Care, a left-of-center health care advocacy group. Before that, Harris worked as chief of staff to Rep. Lauren Underwood (D-Illinois).

	What We’re Reading

This investigation from The Washington Post’s Ariana Eunjung Cha, Dan Keating, Jahi Chikwendiu and Luis Melgar: “The mysterious rise of cancer among young adults in the Corn Belt.”

“What happens when private equity takes over hospitals,” Bethany McLean writes in a column for The Washington Post.

“Bird flu's comeback raises fears about readiness,” reports Tina Reed at Axios.

“Novartis to acquire Avidity in $12B bet on RNA drugs for neuromuscular disease,” Ben Fidler writes for Biopharma Dive.