On January 30, 2026, the DOL proposed a rule that would require PBMs and certain affiliated service providers to disclose detailed information about their compensation when contracting with ERISA self-insured group health plans. The disclosures are intended to help plan sponsors fulfill their fiduciary obligations to ensure that PBM service arrangements and compensation are reasonable.
Background
The proposed rule responds to President Trump’s Executive Order 14273, Lowering Drug Prices by Once Again Putting Americans First, which directed the DOL to issue regulations to improve transparency into the direct and indirect compensation received by PBMs. PBMs play a key role in managing prescription drug benefits for group health plans. However, PBM compensation arrangements are often complicated and difficult for plan sponsors to evaluate because a PBM’s compensation may come not only from the group health plan but also from third parties, such as drug manufacturers and pharmacies.
The Proposed Rule
The proposed rule is designed to give self-insured group health plan sponsors the necessary information to determine if their contracts, including the compensation terms, with covered service providers are reasonable, as required under ERISA Section 408(b)(2). Covered service providers include PBMs and PBM-affiliated brokers and consultants who provide advice, recommendations or referrals regarding PBM services, as well as TPAs that contract with self-insured group health plans to provide PBM services.
Initial Disclosures
First, the proposed rule would require covered service providers to deliver initial disclosures to the plan fiduciary reasonably in advance of entering, renewing, or extending a contract or arrangement. The disclosures must be in plain language and include a description of the PBM services, information on direct compensation from the self-insured group health plan, and indirect compensation reasonably expected to be received from other arrangements, including:
- Rebates and other payments from drug manufacturers.
- Spread compensation (i.e., when the price that the plan paid for a prescription drug exceeds the amount that is reimbursed to the pharmacy).
- Payments recouped from pharmacies in connection with prescription drugs dispensed to the plan ("claw-backs").
The expected compensation must be expressed as a monetary amount (even if estimated) for each drug in the formulary and in the aggregate. Additionally, a covered service provider must disclose drug pricing methodologies used to determine plan costs and certain information requested in writing by the plan fiduciary.
Semi-Annual Disclosures
Second, the proposed rule would require covered service providers to provide semiannual disclosures of the compensation amounts they actually received. This ongoing disclosure requirement is intended to ensure fiduciaries have more than just estimates when monitoring service provider arrangements during the contract term.
Audit Rights
Third, the proposed rule would require the covered service provider to allow the plan fiduciary to perform an audit to verify the accuracy of the disclosed information.
Proposed Administrative Exemption for Plan Fiduciaries
Additionally, the proposal includes an administrative exemption for plan fiduciaries who take certain steps when a covered service provider fails to comply with the rule, including by notifying the DOL if the covered service provider does not correct the failure.
Employer Takeaway
Self-insured group health plan sponsors should be aware of the proposed rule, which significantly expands ERISA Section 408(b)(2) disclosure expectations for PBMs and PBM-related service providers. If finalized, sponsors would receive more comprehensive and detailed information to support their fiduciary review and ongoing monitoring of PBM service provider arrangements. Sponsors should begin evaluating whether their fiduciary governance practices are equipped to review and act on more granular PBM compensation data if the rule is finalized. Further information on ERISA fiduciary governance is available in the NFP publication ERISA Fiduciary Governance: A Guide for Employers.
The DOL is accepting comments on the proposed rule through March 31, 2026. The rule is proposed to apply for plan years beginning on or after July 1, 2026 (January 1, 2027, for calendar year plans).
Finally, the Consolidated Appropriations Act, 2026 (CAA 2026), was signed into law on February 3, 2026. The legislation also includes federal reforms impacting PBMs and other group health plan services providers, which are largely scheduled to take effect in 2029. NFP will report on the CAA 2026 requirements in the next edition of Compliance Corner.
For additional information, review the PBM Fee Disclosure Proposed Rule in the Federal Register and the PBM Fee Disclosure Proposed Rule Fact Sheet issued by the DOL.