The U.S. Department of Labor has finalized a rule requiring pharmacy benefit managers (PBMs) to disclose detailed compensation information to self-insured employer clients. Regulators estimate the measure could reduce drug costs for employers and workers by $22 billion over 10 years.
The rule requires PBMs to report payments received from drugmakers, pharmacies and other participants in the pharmaceutical supply chain. The disclosures will include negotiated drug rebates and “spread” payments, which occur when a health plan pays more for a prescription than the PBM reimburses the pharmacy.
The requirements will apply when employers negotiate or renew a PBM contract and every six months thereafter. Employers will also be allowed to audit the disclosures once a year. PBMs that fail to comply could face financial penalties and the potential invalidation of their contracts.
Labor Department officials said the rule will give employers the information needed to negotiate contracts more effectively and reduce prescription costs. Labor Secretary Keith Sonderling described the measure as a benefit for workers who pay for medicines at the pharmacy counter.
PBMs negotiate drug discounts, determine formulary placement, contract with pharmacies and process claims. Their largest companies are owned by healthcare conglomerates and argue that they deliver significant savings to employers and health plans. Critics, however, say PBMs use their market power to profit from opaque fees, contracts and rebate arrangements.
The debate comes as employers face rising pharmacy spending. Advisory firm WTW expects drug costs to increase 11.5% in 2026, compared with 9% the previous year. A KFF report released the prior week found that just under half of large employers said they had sufficient visibility into payments made by pharmaceutical companies to their health plan or PBM.
Employer groups welcomed the rule. James Gelfand, president and CEO of the ERISA Industry Committee, said it would allow employers to verify figures, question their vendors and hold them accountable under their contracts.
PBM industry representatives opposed the measure, arguing that the Labor Department lacks the authority to impose the disclosures and that existing reforms already require extensive reporting. The Pharmaceutical Care Management Association said the rule creates a duplicative and burdensome system, particularly for smaller PBMs.
The department estimates that PBMs will spend $1 million to comply during the rule’s first year and $300,000 annually thereafter. Regulators acknowledged overlap with provisions in the Consolidated Appropriations Act of 2026 but said the two frameworks have different purposes. The legislation requires more detailed, retrospective information about drug spending and utilization, while the Labor Department rule is intended to provide advance information that helps employers compare PBMs.
The three largest PBMs—Cigna’s Express Scripts, CVS’s Caremark and UnitedHealth’s Optum Rx—control about 80% of U.S. prescriptions. The final rule follows intense lobbying by the industry after the Labor Department first proposed the policy in January.
Sources: HR Dive.