What PBMs and Group Health Plans Need to Know About the Department of Labor’s Proposed PBM Fee Disclosure Rule

On January 30, 2026, the Department of Labor released a proposed rule (Proposed Rule) that would end long‑running confusion about how ERISA disclosure obligations apply to PBMs under the Consolidated Appropriations Act, 2021, and give fiduciaries of ERISA‑covered self‑insured group health plans significantly expanded visibility into PBM services and compensation. The proposal pairs broad compensation transparency with comprehensive audit rights covering PBMs and their affiliates, agents, and subcontractors, including PBM‑affiliated brokers and consultants.

The Proposed Rule and the Consolidated Appropriations Act, 2026, both of which were announced last week, will materially impact the PBM industry, particularly PBM’s arrangements with their plan clients. Below we provide an initial summary of the Proposed Rule’s key provisions and discuss its anticipated impact on PBMs, self-insured group health plans, and other stakeholders. 

Effective Date and Comment Period

If finalized, the rule would take effect 60 days after publication, and apply to plan years beginning on or after July 1, 2026. Comments to the Proposed Rule are due by March 31, 2026.

Scope and Applicability

• Applicable to Self-Insured Group Health Plans Only. The Proposed Rule applies only to ERISA-covered self-insured group health plans. Fully insured group health plans are excluded from the Proposed Rule, but DOL has reserved future rulemaking to address fully insured plan arrangements.
• Scope of “Covered Service Providers”. Covered service providers include (i) entities that directly contract with self-insured group health plans to provide PBM services (i.e., typically the PBM), and (ii) PBM-affiliated brokers and consultants who provide advice, recommendations, or referrals regarding PBM services.
• Non-affiliated brokers and consultants remain subject to the disclosures required under the Consolidated Appropriations Act, 2021.
• Definition of PBM Services. PBM services are broadly defined to include services necessary to manage or administer a plan’s prescription drug benefit (including drugs covered under the medical benefit), such as rebate aggregation, claims processing, and utilization management (e.g., prior authorization and step therapy).
• Inapplicable to Medical Claims. TPAs, health insurers, and other entities involved in the administration of a self-insured group health plan’s medical claims are excluded from the Proposed Rule, though DOL has requested comment on whether the disclosures of the Proposed Rule should be extended to such entities. 

Key Provisions

Covered service providers are responsible for making compensation disclosures to plan fiduciaries and allowing plan fiduciaries to audit those disclosures for accuracy under the Proposed Rule. As an extension of their disclosure responsibilities, covered service providers are also required to make compensation disclosures on behalf of all affiliates, agents, and subcontractors that provide PBM services to the plan under a PBM arrangement but are not directly contracted with the plan. DOL specifically notes that the term “agent” is intended to capture, for example, rebate aggregators or GPOs outside of the laws of the U.S.

Disclosure Requirements

The proposed disclosures are intended to make clear to plan fiduciaries (i) the PBM services that will be provided to the plan, and (ii) all compensation expected to be received by the covered service provider (or any affiliate, agent, or subcontractor) in connection with the arrangement. Disclosures are required prior to the self-insured group health plan entering into a contract or arrangement with a covered service provider and on a semi-annual basis thereafter. Semi-annual disclosures are due within 30 days after each six-month period of the contract term and must detail actual compensation received by category, explain material overages of 5% or more versus initial estimates, and restate audit rights.

Disclosures must contain sufficient specificity to permit plan fiduciaries to determine reasonableness, which includes requiring compensation to be expressed as monetary amounts, and allowing estimates only if actual figures are not reasonably ascertainable. The following written disclosures must be provided to applicable plan fiduciaries:

• Description of PBM Services. Full disclosure of PBM services to be provided. DOL notes that, absent full disclosure of services, questions may arise regarding whether the covered service provider is providing services within parameters established by the plan or if the covered service provider is taking discretionary behavior (which would then implicate the covered service provider as a fiduciary to the plan under ERISA).
• Direct Compensation. Aggregate and service-level breakdowns of all compensation that the covered service provider or an affiliate, agent, or subcontractor reasonably expects to receive on a quarterly basis from the self-insured group health plan or plan sponsor in connection with the arrangement.
• Manufacturer Payments (Rebates and Other Remuneration). Disclosure of all payments (including rebates, administrative fees, and price protection fees) reasonably expected to be received by the covered service provider or an affiliate, agent, or subcontractor from drug manufacturers, rebate aggregators, or other similar entities. This disclosure must be made on an aggregate and per-formulary drug basis and expressed as a dollar amount reasonably expected to be paid on a quarterly basis, and must specify the amounts that will be passed through to the plan and the amounts that will be retained by the covered service provider, or an affiliate, agent, or subcontractor.
• Spread Compensation. Aggregate, channel-level, and formulary drug-level disclosures of the dollar amounts of spread compensation the covered service provider, or an affiliate, agent, or subcontractor reasonably expects to earn under the arrangement.
• Copay Claw-backs. Disclosure of the reasonably expected amounts of compensation earned by the covered service provider or an affiliate, agent, or subcontractor for clawing back copayments made to the pharmacy at the point of sale.
• Termination Compensation. Disclosure of any compensation the covered service provider or an affiliate, agent, or subcontractor expects to receive in connection with contract termination, including an explanation of how rebates will be treated upon termination.
• Other Compensation. Catch-all disclosure of any additional compensation not otherwise disclosed, but reasonably expected to be received by the covered service provider or an affiliate, agent, or subcontractor in connection with the contract or arrangement.
• Formulary Placement Arrangements. Explanation of arrangements and incentives with manufacturers affecting formulary design, including a description of how such incentives impact services provided to the plan and otherwise align with plan and member interests, and identification of reasonably available therapeutic alternatives to on-formulary drugs (and if applicable, explanations of why such alternatives are omitted from the formulary). For covered service providers who retain authority to modify the formulary, this disclosure must also explain why the covered service provider (or its affiliate, agent, or subcontractor) is retaining such authority and the expected frequency of changes to the formulary.
• Drug Pricing Methodology. Disclosure of net cost to the plan for each formulary drug on a per-channel basis.

Audit Rights

The Proposed Rule establishes annual audit rights for self-insured group health plans to audit their covered service providers to, at minimum, verify the accuracy of the covered service provider’s disclosures (though the scope of the audit may be expanded upon the parties’ mutual agreement). To minimize barriers to audits, the Proposed Rule also (i) requires that audit costs be shared between the parties, (ii) gives the plan sole authority to select the auditor without limitations or interference by a covered service provider, and (iii) broadly prohibits covered service providers from imposing restrictive conditions on the auditor, such as traveling to the covered service provider’s office to conduct the audit or limiting the number of records that will be provided. 

Additional Provisions

• Enforcement and Penalties. Non‑compliance can render the arrangement a prohibited transaction under ERISA, exposing service providers and fiduciaries to DOL enforcement and civil penalties. Fiduciaries must report non-compliance to the DOL and may be required to terminate contracts if failures are not remedied within 90 days.
• Fiduciary Status. Covered service providers must disclose if they (or their affiliates, agents, or subcontractors) will serve as ERISA fiduciaries to a plan. Although DOL does not deem PBMs fiduciaries in the Proposed Rule per se, it notes that any entity exercising discretionary authority or control over plan management, administration, or assets may be a fiduciary. Accordingly, PBMs should ensure that the services they provide (and those provided by their affiliates, agents, and subcontractors) are not discretionary but instead operate within the parameters disclosed to and approved by the plan fiduciary.

Implications for PBMs and Self-Insured Group Health Plans

The Proposed Rule introduces a comprehensive framework for PBM fee and compensation disclosure, designed to enhance oversight and enable plan fiduciaries to more fairly assess the reasonableness of PBM contracts and arrangements. While the Proposed Rule may increase PBM compensation transparency, the benefits may (especially in the short-term) be outweighed by the compliance costs that are likely to fall on PBMs, plans, and other services providers as they work to implement the Proposed Rule’s requirements.

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