Large employers that pay for their workers’ health care directly will soon be able to see how much their pharmacy benefit managers make on every prescription, under a final rule the U.S. Department of Labor published in the Federal Register on Monday, Nov. 2.
The rule requires pharmacy benefit managers, or PBMs, and their affiliated brokers and consultants to disclose their fees and compensation to large, self-insured group health plans, including rebates from drug manufacturers and money kept from the gap between what a plan pays and what a pharmacy is reimbursed. The department’s Employee Benefits Security Administration announced the final rule on Oct. 29.
The rule takes effect Jan. 4, 2027, and applies to plan years beginning on or after July 1, 2027, according to the Federal Register notice. The Labor Department projects it will lower prescription drug costs for health plans and participants by as much as $22 billion over 10 years.
What do pharmacy benefit managers do, and why does this rule matter?
PBMs manage prescription drug benefits for employer health plans. They build formularies, the lists of drugs a plan covers, negotiate rebates and fees with drug manufacturers, set up pharmacy networks and process prescription claims, according to the department’s fact sheet.
The Labor Department says PBMs may be paid by the health plan as well as by drug manufacturers, pharmacies, rebate aggregators and others, and that those arrangements can be hard for employers to evaluate. PBMs serve employer-sponsored self-insured plans that cover approximately 90 million Americans, the department said.
Pharmacy spending “is a major driver of overall healthcare costs for employers and is growing faster than medical and surgical spending,” the department wrote in the rule. Employer health costs are already climbing: workers now pay $7,471 a year toward family coverage, as HNC reported last month.
Which health plans does the final rule cover?
The detailed requirements apply to service providers for large, self-insured group health plans. Those are generally self-insured plans with 100 or more participants, or plans offered by employers with 100 or more employees.
A provider is covered if it delivers pharmacy benefit management services, or related brokerage or consulting services, and expects to receive $1,000 or more in compensation.
Service providers to smaller plans and fully insured plans are not covered by the rule’s detailed requirements, but they still must meet the disclosure requirements Congress wrote into federal benefits law, the fact sheet says.
What will PBMs have to disclose?
Before a contract is signed, extended or renewed, a covered provider must give the plan a written disclosure. For renewals and extensions, the department considers at least 90 days in advance to be reasonable. The disclosure must describe:
- Direct compensation the provider expects to receive from the plan, by service and in total.
- Manufacturer payments, including rebates, fees and discounts, and how much is passed to the plan versus kept.
- Spread compensation, the difference between what the plan pays and what pharmacies are paid, by drug and pharmacy channel.
- Pharmacy recoupments, such as copay claw-backs and other after-the-fact adjustments to pharmacy payments.
- Price protection agreements with drug manufacturers, formulary placement incentives and the net price the plan will pay after rebates and fees.
Providers then must report what they actually received every six months, within 30 days after each period ends, or every quarter if the plan asks. If actual pay runs 5% or more above the initial estimate, the provider must explain the difference. Compensation must be stated as a dollar amount, and plans can request the data in a standard machine-readable file.
Can employers check whether the numbers are accurate?
Yes. A plan may audit its provider at least once a year and choose its own auditor, according to the fact sheet. The provider must acknowledge an audit request within 10 business days and generally hand over the information within 60 calendar days. The plan pays the auditor.
“When employers can finally see what PBMs are really being paid, they can negotiate harder, cut out the waste, and pass real savings on to their workers,” Daniel Aronowitz, assistant secretary for the Employee Benefits Security Administration, said in the announcement.
How did the rule come about, and what happens before it applies?
The department proposed the rule on Jan. 30, 2026. The final version implements transparency changes Congress passed in the Consolidated Appropriations Act, 2026, which the department described as bipartisan.
What does this mean for workers and smaller employers?
The rule does not directly change what a worker pays at the pharmacy. It gives employers who run large self-insured plans more information to negotiate PBM contracts. The department says employers can use that information to seek lower drug costs for workers and their families.
Employers and workers with questions about job-based health plans can contact the agency through askebsa.dol.gov or by calling 866-444-3272 toll-free.
Key Takeaways
- The Labor Department published its final PBM fee disclosure rule in the Federal Register on Nov. 2, 2026; it takes effect Jan. 4, 2027.
- Requirements apply to plan years beginning on or after July 1, 2027, for large, self-insured employer health plans.
- PBMs must disclose manufacturer rebates, spread pricing, pharmacy claw-backs and other compensation, upfront and every six months.
- Plans can audit their PBM at least once a year and choose their own auditor.
- The department projects savings of as much as $22 billion over 10 years for plans and participants.
Frequently Asked Questions
What is the PBM fee disclosure rule?
It is a final Labor Department rule requiring pharmacy benefit managers and their affiliated brokers and consultants to disclose their fees and compensation, including manufacturer rebates and spread pricing, to large, self-insured employer health plans.
When does the PBM disclosure rule take effect?
The rule is effective Jan. 4, 2027, and applies to plan years beginning on or after July 1, 2027, according to the Federal Register notice published Nov. 2, 2026.
Does the rule apply to small businesses?
The detailed requirements cover self-insured plans with 100 or more participants or employers with 100 or more employees. Providers to smaller and fully insured plans still must meet the disclosure requirements in federal law.
Will this lower what I pay for prescriptions?
The rule does not set drug prices or copays. The Labor Department projects it will lower prescription drug costs for plans and participants by as much as $22 billion over 10 years by helping employers negotiate PBM contracts.
Featured image: A Navy pharmacist verifies the dosage and medication of a prescription at the National Naval Medical Center in Bethesda, Md., in 2003. Illustrative photo. (U.S. Navy photo by Chief Warrant Officer 4 Seth Rossman, public domain, via Wikimedia Commons)
