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Legal Alert: PBM Transparency Coming Soon
Industry News
Thursday, May 28 2026
Two recent movements on the federal level have paved the way for greater pharmacy benefit manager (“PBM”) transparency for group health plans.
The first is a proposed rule, “Improving Transparency Into Pharmacy Benefit Manager Fee Disclosure” issued by the Department of Labor which, if finalized, will require detailed disclosures of PBM pricing and compensation to self-funded ERISA plans and will give self-funded ERISA plans broader audit rights in their PBM contracts than most PBMs are currently willing to offer.
The second is a recent change in the law included in the Consolidated Appropriation Act of 2026 (“CAA, 2026”), which was enacted on February 3, 2026. These changes impact both large plans (i.e., plans sponsored by employers with at least 100 participants or by employers with at least 100 employees) and small self-funded and fully insured ERISA plans, as well as carriers or issuers of group health plans subject to ERISA, the Internal Revenue Code (the “Code”), or the Public Health Service Act (“PHSA”).
The Proposed Rule and CAA, 2026, including their respective effective dates, are described in more detail below.
Proposed DOL Rules
On January 30, 2026, the DOL released proposed regulations governing PBMs which would require PBMs and certain PBM-affiliated brokers and consultants who enter into contracts with self-funded, ERISA-covered group health plans to provide PBM services either directly or through affiliates, agents, or subcontractors (collectively “covered service providers”) where they expect to receive $1,000 or more in direct or indirect compensation, to provide initial and semi-annual disclosures to the responsible plan fiduciaries of those plans. Similar to the broker compensation disclosure requirements under the CAA, 2021, these proposed rules are aimed at ensuring compensation for PBMs is reasonable for purposes of ERISA’s prohibited transaction rules. If finalized, self-funded ERISA plans, PBMs, and covered service providers will be required to comply with these requirements to avoid violating ERISAs prohibited transaction requirements.
Fully insured plans are exempt from these requirements. “PBM services” provided by a covered service provider under the proposed rule include certain services that are provided either through a carved out PBM relationship or those that are provided directly through a self-funded medical plan and include providers of advice, recommendations, or referrals regarding PBM services who are themselves providers of PBM services or their affiliates, agents, or subcontractors. The proposed rule includes examples of types of PBM services that would qualify under the proposed rule, including, but not limited to, acting as a negotiator or aggregator of rebates, fees, discounts, and other price concessions for prescription drugs, establishing or maintaining prescription drug formularies, establishing or maintaining pharmacy networks through a variety of pharmacy types to provide prescription drugs (retail, mail, specialty, nursing home, long term care, and infusion), processing and paying prescription drug claims, performing utilization review and management and related activities, adjudicating prescription drug appeals or grievances, recordkeeping for prescription drug plan benefits.
To Read More Click Here
The first is a proposed rule, “Improving Transparency Into Pharmacy Benefit Manager Fee Disclosure” issued by the Department of Labor which, if finalized, will require detailed disclosures of PBM pricing and compensation to self-funded ERISA plans and will give self-funded ERISA plans broader audit rights in their PBM contracts than most PBMs are currently willing to offer.
The second is a recent change in the law included in the Consolidated Appropriation Act of 2026 (“CAA, 2026”), which was enacted on February 3, 2026. These changes impact both large plans (i.e., plans sponsored by employers with at least 100 participants or by employers with at least 100 employees) and small self-funded and fully insured ERISA plans, as well as carriers or issuers of group health plans subject to ERISA, the Internal Revenue Code (the “Code”), or the Public Health Service Act (“PHSA”).
The Proposed Rule and CAA, 2026, including their respective effective dates, are described in more detail below.
Proposed DOL Rules
On January 30, 2026, the DOL released proposed regulations governing PBMs which would require PBMs and certain PBM-affiliated brokers and consultants who enter into contracts with self-funded, ERISA-covered group health plans to provide PBM services either directly or through affiliates, agents, or subcontractors (collectively “covered service providers”) where they expect to receive $1,000 or more in direct or indirect compensation, to provide initial and semi-annual disclosures to the responsible plan fiduciaries of those plans. Similar to the broker compensation disclosure requirements under the CAA, 2021, these proposed rules are aimed at ensuring compensation for PBMs is reasonable for purposes of ERISA’s prohibited transaction rules. If finalized, self-funded ERISA plans, PBMs, and covered service providers will be required to comply with these requirements to avoid violating ERISAs prohibited transaction requirements.
Fully insured plans are exempt from these requirements. “PBM services” provided by a covered service provider under the proposed rule include certain services that are provided either through a carved out PBM relationship or those that are provided directly through a self-funded medical plan and include providers of advice, recommendations, or referrals regarding PBM services who are themselves providers of PBM services or their affiliates, agents, or subcontractors. The proposed rule includes examples of types of PBM services that would qualify under the proposed rule, including, but not limited to, acting as a negotiator or aggregator of rebates, fees, discounts, and other price concessions for prescription drugs, establishing or maintaining prescription drug formularies, establishing or maintaining pharmacy networks through a variety of pharmacy types to provide prescription drugs (retail, mail, specialty, nursing home, long term care, and infusion), processing and paying prescription drug claims, performing utilization review and management and related activities, adjudicating prescription drug appeals or grievances, recordkeeping for prescription drug plan benefits.
To Read More Click Here