Labor Department finalises rule forcing pharmacy benefit managers to show large employer health plans what they earn

The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) published a final rule today, Improving Transparency into Pharmacy Benefit Manager Fee Disclosure (29 CFR Part 2550; FR Doc. 2026-22306; 91 FR 69092). Under ERISA, a plan’s contract with a service provider is a prohibited transaction unless it qualifies for an exemption. The rule makes detailed disclosure of what pharmacy benefit managers (PBMs) are paid a condition of that exemption (ERISA section 408(b)(2)). It implements amendments in the Consolidated Appropriations Act, 2026, and responds to Executive Order 14273.

Who is covered

• Plans: ERISA-covered, self-insured group health plans whose sponsor had an average of at least 100 participants in the preceding plan year (“specified large plans”). The proposal had covered all self-insured plans. The final rule narrows it to large plans and adds an exception for plans whose sponsor is, or is affiliated with, a drug manufacturer or other participant in the drug supply chain.
• Providers: PBMs, plus brokers and consultants affiliated with them that advise plans on pharmacy benefits.
• Scale: DOL counts about 131,102 self-insured group health plans with 100 or more participants, and about 72.4 million participants and beneficiaries in ERISA-covered large self-insured plans.

What PBMs must disclose, and when

• Before signing, extending or renewing: initial disclosures of expected direct and indirect compensation, such as rebates, fees and spread pricing.
• Every six months (quarterly if the plan asks): ongoing disclosures. Any increase of 5% or more in aggregate compensation over what was disclosed counts as “material” and must be reported, unless the contract sets a lower threshold.
• Audit rights: plans may audit their covered service providers at least once per year to check the disclosures. If a PBM fails to provide required information within 90 days, the plan must decide whether to stay in the contract and notify DOL.

Dates

• Effective 4 January 2027. It applies to plan years beginning on or after 1 July 2027.
• Separately, under the 2026 appropriations law, PBMs must pass through manufacturer rebates, fees and other remuneration to the plans they serve, for plan years beginning on or after 3 August 2028. That requirement is set by statute, not by this rule. New ERISA section 726 also requires a summary document that plans can give to participants on request.

Costs and benefits (DOL’s own estimates)

• Costs: about $20.8 million in first-year familiarisation for plans, administrators and PBMs. PBM IT systems cost $80.3 million in year one and $21.9 million a year after that, and preparing disclosures costs about $12.5 million a year. Annualised cost: $60.95 million a year (7% discount rate).
• Monetised benefit: an average $293.0 million a year (range $146.5–$586.0 million) from lower-cost drugs, based on willingness to pay. DOL also cites a CBO estimate on a related bill: premium effects would be under 0.1% in the first year and would shrink over time.

Who pays, who gains

The disclosures go to the employer or plan fiduciary, not to individual workers. Any savings reach employees only if employers use the information to negotiate cheaper contracts and pass the savings through in premiums or cost-sharing. The rule does not cap PBM fees or set drug prices. Workers in fully insured plans and in plans with fewer than 100 participants are outside its detailed requirements.