On January 30, 2026, the Department of Labor (DOL) published proposed regulations that would require pharmacy benefit managers (PBMs) to disclose direct and indirect compensation that PBMs (and their affiliates, agents, and subcontractors) receive in connection with providing pharmacy benefit management services (or advice, recommendations, and referrals regarding such services) to self-insured group health plans. If an employer has engaged a third-party administrator to provide services, including pharmacy benefit management services, for its self-insured group health plan, the third-party administrator is responsible for obtaining the required information from the PBM and disclosing it to the employer.
The DOL proposal would not apply the disclosure obligations with respect to governmental plans, small employer health reimbursement arrangements, or fully insured group health plans, although the DOL may revisit its application to fully insured plans in future rulemaking.
What Must Be Disclosed?
Under the proposed rules, the disclosure would be required to include the following information regarding services provided under the contract and compensation received (or expected to be received) by a PBM (or an affiliate, agent or subcontractor) in connection with such services:
- A description of all pharmacy benefit management services (or advice, recommendations, or referrals regarding pharmacy benefit management services)
- Direct compensation both in the aggregate and by service received from the plan or plan sponsor (such as administrative fees paid by the plan or sponsor)
- Payments from drug manufacturers in the aggregate and for each drug on the formulary, such as manufacturer rebates, fees, and incentives, and how much of those amounts are passed through to the plan or retained by the PBM
- Spread compensation showing, in the aggregate and per drug and drug channel, the difference between what plan pays the PBM for a drug and the amount paid to pharmacies dispensing the drug
- Copay clawbacks showing the amount recouped from a pharmacy when the amount paid to the pharmacy by a plan participant exceeds the PBM reimbursement to the pharmacy
- A description of manufacturer price protection or inflation agreements and the amounts passed through to the plan or retained by the PBM
- Any compensation that would be received upon termination of the plan’s service contract and how any prepaid amounts will be calculated and refunding upon termination
- A description of any other compensation received in connection with the service contract
- A description of formulary placement incentives, an identification of reasonably available alternatives, and procedures for notifying plans of material changes to the formulary
- A description of the net cost to the plan of each drug on the formulary, for each of pharmacy channel
- Statement of PBM’s fiduciary status and disclosure of any conflicts of interest
- Notice of the plan’s audit rights to confirm the accuracy of the disclosures
The disclosure must include actual monetary amounts unless the amount is not reasonably ascertainable, in which case the disclosure must provide an estimated amount.
Disclosures must be provided in a machine-readable format upon request.
When is Reporting Required?
If finalized, the regulations would be effective for plan years beginning on or after July 1, 2026 (so, January 1, 2027, for calendar year plans). Initial disclosures must be made before a plan enters into a new service contract (or at least 30 days before extending or renewing an existing contract) and semi-annually (no later than 30 days after the end of each six-month period) thereafter.
Audit Rights
Plans would have the right to audit the disclosures at least annually to verify accuracy of the disclosures. The plan fiduciary may select the auditor, and PBMs would be prohibited from restricting the plan fiduciary’s selection of an auditor or the auditor’s access to relevant records, data, or other relevant information. The plan would be responsible for expenses related to selecting and retaining the auditor while the PBM would be responsible for costs associated with providing requested information.
Plan Fiduciary Responsibilities
Plan fiduciaries would be responsible for ensuring that they receive required disclosures. They would also be responsible for the reviewing the disclosures to determine whether any actions need to be taken in response to the disclosures, such as exercising their right to audit the accuracy of the disclosure.
If a PBM fails to make the required disclosures or comply with the plan’s audit right after the plan fiduciary notifies the PBM of the failure, the plan fiduciary would be responsible for considering whether to report the PBM’s failure to the DOL and whether to terminate its service agreement with the PBM consistent with its duty of prudence under ERISA.
Comment Period and Next Steps
The comment period for the proposed regulations runs until March 31, 2026. The DOL will review public input before issuing a final rule, which is expected to occur later in 2026.
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