A new rule finalized by the U.S. Department of Labor on Thursday will require pharmacy benefit managers to provide detailed information about their compensation to self-insured employer clients, a move expected to reduce drug costs for employers and workers by $22 billion over the next decade.
Disclosure requirements for pharmacy benefit managers
The rule, which has garnered significant support from employers and policymakers, yet faces strong opposition from pharmacy benefit managers, mandates that these middlemen disclose extensive data regarding payments received from drugmakers, pharmacies, and other entities within the pharmaceutical supply chain.
For the first time, this will include disclosures on rebates negotiated with drugmakers for specific medications, as well as “spread” payments retained by pharmacy benefit managers when the plan pays more for a prescription drug than the pharmacy benefit manager reimburses the pharmacy. Under the finalized rule, set to take effect in July 2027, pharmacy benefit managers will be required to share this information during contract negotiations or renewals with employers, and on a semi-annual basis thereafter. Employers will have the opportunity to audit these disclosures annually.
The rule imposes significant consequences for non-compliant pharmacy benefit managers, including potential financial penalties and contract invalidation. According to a Thursday press release from Trump administration officials, the rule aims to empower employers with the necessary information to negotiate contracts effectively and lower drug costs for workers and their families.
“This is a win for every American worker who has ever paid too much at the pharmacy counter,” stated Secretary of Labor Keith Sonderling. “For years, PBMs have operated in the shadows, pocketing hidden fees while workers and employers were left in the dark.”
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PBMs perform a wide range of services for employers and health plans, including negotiating discounts on drugs, determining their formulary placement, contracting with pharmacies and processing claims. Employers complain that it’s difficult to tell whether their PBM is being a good steward of their dollars, given the middlemen maintain a complex web of hidden fees, opaque business contracts and rebate arrangements. Just under half of large employers report getting sufficient insight into how much pharmaceutical companies are paying their health plan or PBM, according to a report from KFF released last week.
Meanwhile, pharmacy spending is gobbling up a greater share of employers’ health spending. Drug costs are expected to jump 11.5% in 2026, up from 9% the year prior, according to advisory firm WTW. Employer groups say the transparency created by the DOL will help them oversee their PBMs and tamp down on unnecessary spending, and cheered the rule’s finalization on Thursday.
Industry response and potential legal challenges
The Department of Labor estimates that PBMs will have to spend $1 million in the rule’s first year, and another $300,000 in subsequent years to comply with the new disclosure requirements. Regulators acknowledged “areas of overlap” with the Consolidated Appropriations Act but adjusted the rule to align with the legislation, limiting disclosures to large self-insured group health plans and harmonizing disclosure timelines and terminology.
Market dominance and compliance costs
The “Big Three” PBMs — Cigna’s Express Scripts, CVS’ Caremark and UnitedHealth’s Optum Rx — jointly control about 80% of all U.S. prescriptions, fueling calls for Congress to break them up.
