Labor Department rule requires PBM disclosures, with $22 billion in projected decade savings

The Department of Labor has finalized a rule requiring pharmacy benefit managers, or PBMs, to disclose compensation information to self-insured employer clients.¹ Regulators project that the measure will reduce drug costs for employers and workers by $22 billion over a decade.¹ That amount is an expected cumulative reduction across the decade, not a reported saving already realized under the rule.¹ The requirement centers on making PBM compensation visible to the employer plans that hire them, rather than on a stated change to the PBMs’ other responsibilities.¹ The projected benefit is meant to reach both employers and workers, while the disclosure obligation itself is directed at PBMs serving self-insured employer clients.¹

The disclosures reach payments PBMs receive from drug manufacturers, pharmacies and other participants in the pharmaceutical supply chain.¹ Among the specified items are rebates paid by drugmakers and spread payments that a PBM keeps when a health plan pays more than the amount the PBM reimburses a pharmacy.¹ This makes the reporting relevant both to money coming from drugmakers and to a difference between a plan’s payment and a pharmacy’s reimbursement.¹ The rule sets up disclosure of these compensation flows so employer clients can review information about how PBMs are paid.¹ Together, the examples show that the required information covers more than one kind of payment and includes transactions involving plans, PBMs and pharmacies.¹

The rule is scheduled to take effect in July 2027.¹ A PBM must provide disclosures during contract negotiations or renewals, and then at six-month intervals.¹ Employers may audit the PBM’s disclosures once a year, providing a separate opportunity to examine the reported information.¹ The combination of recurring reports and an annual audit gives employers repeated chances to review compensation data, rather than a single disclosure point.¹ The reporting schedule and the audit option are separate mechanisms: disclosures recur during the relationship, while the audit opportunity is available annually.¹

The rule applies to self-insured employer clients, and the Department of Labor says it limited disclosures to large self-insured group health plans.¹ The reporting duty therefore concerns the plans within that stated scope, rather than every health plan.¹ The Department said it aligned the rule’s schedules, terminology and definitions with the Consolidated Appropriations Act, or CAA.¹ It described the CAA requirements and its own rule as complementary, while distinguishing the new information employers receive from the CAA’s retrospective reporting.¹ The stated limits on coverage mean that the Department designed the disclosure obligation for a defined group of plans, while aligning parts of its framework with the CAA.¹

PBMs negotiate discounts on medicines, decide where drugs appear on formularies, make agreements with pharmacies and process claims.¹ Those functions place PBMs in several parts of the process through which health plans arrange access to drugs and handle pharmacy claims.¹ The companies say they produce significant savings for clients, while critics argue that leading PBMs exploit market influence to earn profits and increase costs for others.¹ The disclosure rule addresses this disagreement by requiring employer clients to receive compensation information, without resolving in the stated facts how much any particular PBM saves or costs.¹ Because PBMs perform several roles for plans, the rule’s compensation reporting gives employer clients information relevant to evaluating vendors whose value is disputed by the companies and their critics.¹

The information requirement comes amid a reported gap in employer knowledge: just under half of large employers said they had enough insight into what drug companies pay their health plan or PBM, according to KFF.¹ That finding concerns large employers’ reported understanding of payments from pharmaceutical companies; it is not a count of all employers or a measure of the rule’s future effect.¹ The ERISA Industry Committee said the disclosures would let employers check PBM figures and hold vendors to their contractual commitments.¹ Taken together, the employer knowledge finding and the committee’s stated use for the reports describe the information problem the rule is intended to address.¹ The survey finding and the committee’s view point to employers as the immediate users of the information, with the broader goal of improving accountability to their contracts.¹

The Department of Labor estimates that PBMs will spend $1 million in the first year of the rule and a further $300,000 in subsequent years to comply.¹ The first-year estimate and the later-year estimate are distinct amounts, with the latter applying after the opening year.¹ The Department said the disclosures would equip employers to negotiate PBM contracts and reduce costs borne by workers and families.¹ Labor Secretary Keith Sonderling described the measure as beneficial to workers who, in his view, had been overcharged at pharmacies.¹ The Department’s compliance estimate describes costs for PBMs, while its stated rationale focuses on giving employers information intended to help workers and families.¹

Industry groups opposing the rule argued that the Department of Labor lacked legal power to mandate the disclosures and that the reporting load could damage mid-sized PBMs.¹ The Pharmaceutical Care Management Association, or PCMA, said the rule duplicated PBM reforms included in the Consolidated Appropriations Act of 2026.¹ PCMA president David Marin said federal transparency duties for PBMs were already law and called the added reporting system unnecessary and burdensome, particularly for smaller firms.¹ These objections focus on the Department’s authority, the added compliance work and the relationship between the new reporting and existing requirements.¹ The burden concern is not framed the same way for every PBM: industry groups specifically warned about harm to mid-sized firms, while PCMA emphasized smaller PBMs.¹

The Department’s account is that the CAA collects information after the fact about drug spending and use, whereas its rule requires information up front so plans can compare PBMs.¹ Affirmed Rx chief executive Greg Baker said the Labor Department rule sets out disclosure and fiduciary responsibility, while the CAA specifies the information PBMs must provide.¹ The Department says the two systems complement one another and that it aligned elements of its rule with the CAA, despite their different reporting purposes and timing.¹ The rule also enters a market where Cigna’s Express Scripts, CVS’ Caremark and UnitedHealth’s Optum Rx together control about 80% of prescriptions in the United States.¹ Separately, WTW expected drug costs to increase 11.5% in 2026, up from 9% in the previous year; that forecast provides context for the projected savings, not proof of savings produced by this rule.¹ The distinction between retrospective CAA reporting and upfront comparisons under the DOL rule explains why the Department calls the regimes complementary even though they serve different purposes.¹