Congress is moving forward with PBM reforms as the DOL implements a new fee-disclosure rule aimed at increasing transparency in the healthcare industry.
In recent years, federal oversight of the pharmaceutical benefit manager (PBM) industry has grown, leading to major actions that will shape 2026. The Consolidated Appropriations Act (CAA) of 2026, signed into law on February 3, 2026, contains significant reforms for PBMs. Separately, the U.S. Department of Labor (DOL) announced on January 28, 2026, a proposed rule that would establish new PBM fee-disclosure obligations, furthering the federal government’s increasing focus on regulatory oversight of the industry.
Group health plans generally rely on PBMs to process prescription drug claims, design pharmacy networks, and negotiate rebates from drug manufacturers. Amid growing concern over certain PBM practices, such as retaining a share of drug manufacturer rebates and charging health plans more for a medication than they pay the pharmacy, many states have started enacting a patchwork of laws to regulate the industry in the absence of federal regulations.
To address these growing concerns, the CAA bill includes comprehensive PBM industry reforms at the federal level. Key highlights for health plan sponsors include the following:
Starting in 2029, PBMs will be required to provide group health plans with:
In addition, group health plans will be required to provide participants and beneficiaries with an annual notice explaining that their PBM is required to submit prescription drug spending reports. This notice can be included in plan documents or given separately to individuals. Large plans will also be required to provide information about the difference between what the plan paid the PBM and what the PBM paid the pharmacy for a covered drug associated with a participant’s or beneficiary’s claim.
When a PBM or group health plan fails to provide the required information, they can face a civil monetary penalty of $10,000 for every day of noncompliance. Providing false information can lead to additional penalties; however, penalties can be waived for those who make good-faith efforts to comply.
The bill also expands the Employee Retirement Income Security Act’s (ERISA) definition of a “covered service provider” to specifically include PBMs and other health plan-related services. Covered service providers are required to disclose detailed information about their services and all expected direct and indirect compensation, ensuring plan fiduciaries have the information necessary to evaluate the reasonableness of service contracts.
For their contracts to be considered reasonable under the compensation disclosure rules, PBMs must pass through to group health plans and issuers 100% of all rebates, fees, alternative discounts, and other remuneration. These rebates, fees, and alternative discounts must generally be paid quarterly, fully disclosed, and itemized to the group health plan or issuer. In the event of an overpayment as shown by an audit, the plan will be required to return the overpayment to the PBM.
The DOL’s proposed rule, much like the CAA bill, is based on an April 2025 Executive Order aimed at improving transparency around PBM compensation.
Under the proposed rule, PBMs would be required to provide compensation disclosures to employers that offer a self-insured group health plan. This enables plan fiduciaries to assess the reasonableness of the PBM’s compensation.
PBMs would be required to disclose the following information:
The rule would also allow plan fiduciaries to audit the accuracy of PBM disclosures and provide additional relief for plan fiduciaries if their PBM fails to meet its obligations.
The PBM reform provisions of the CAA don’t take effect until 2029.
The DOL’s proposed rule requiring PBM compensation disclosures excludes fully insured group health plans, but the similar disclosure obligations for these plans are being reserved for future action. It is currently impossible to predict when final regulations will be issued. The Miller Group will continue to keep our clients updated on developments that affect their relationship and compensation of PBMs.
