DOL Issues Final PBM Fee Disclosure Rule

The Department of Labor on Thursday announced a final rule under the Employee Retirement Income Security Act that requires providers of pharmacy benefit management services to make detailed disclosures to fiduciaries of large, employer-sponsored, self-insured group health plans to satisfy ERISA’s statutory prohibited transaction exemption for service arrangements.

The final rule also provides compliance assistance information for other service providers who must report fees and compensation to group health plans following the passage of the Consolidated Appropriations Act of 2026. The law requires pharmacy benefit managers to pass through 100% of any rebates, fees, alternative discounts and other remuneration received from drug manufacturers and related entities to the ERISA plan.

“For most employers, healthcare is the second-largest operating expense,” said Daniel Aronowitz, head of the Employee Benefits Security Administration, during a livestreamed announcement of the rule on Thursday. “Prescription drugs are [the] fastest growing piece … But employers may not see how much of that spending their PBMs keep, or how those PBMs make their money.”

Background

PBMs are third-party administrators that manage prescription drug benefits for health insurers, employers and government programs. Acting as intermediaries between drug manufacturers and insurers, PBMs negotiate drug prices, process claims and manage formularies—lists of covered medications. While intended to control prescription drug spending, PBMs have faced regulatory scrutiny for allegedly squeezing pharmacies and inflating drug costs. Their decisions directly influence which medications are available to patients covered by health plans.

In April 2025, President Donald Trump issued an executive order directing the department to improve employer health plan fiduciary transparency into the direct and indirect compensation PBMs receive. Then, in February 2026, the DOL issued the proposed fee disclosure rule, “Improving Transparency into Pharmacy Benefit Manager Fee Disclosure,” from which the final rule was built.

At the time, the DOL stated the rule was meant to give plan sponsors information to judge whether PBM contracts are reasonable, whether conflicts of interest exist and whether the deals being struck actually serve workers and plan participants—rather than the intermediaries themselves.

Public comments on the proposed rule were due by March 31.

To Whom the Disclosures Apply

During Thursday’s announcement, Aronowitz said that based on EBSA’s analysis of the comments received on the proposed rule, the agency decided that the detailed disclosures in the final rule “would most benefit the responsible plan fiduciaries of the larger self-insured group health plans who are likely to have resources to analyze the disclosures and take appropriate action.”

The rule applies to covered service providers of large, self-insured group health plans, which are generally defined as self-insured plans with 100 or more participants or self-insured plans offered by employers with at least 100 employees, according to the DOL’s fact sheet about the rule, which awaits publication in the Federal Register. The covered service providers include PBM-affiliated brokers and consultants that:

• Enter into contracts with the plans to provide pharmacy benefit management services or related brokerage or consulting services; and
• Expect to receive at least $1,000 in compensation, whether the services are performed directly or through affiliates, agents or subcontractors.

Initial Disclosures

According to Aronowitz, the final rule has three elements: initial disclosures, semiannual disclosures and audit rights. 

The rule requires covered service providers to provide written initial disclosures to plan fiduciaries reasonably in advance of entering into a contract or no more than 90 days before a contract’s extension or renewal date. The initial disclosure requirements must include clear descriptions of services to be provided and compensation reasonably expected on a semiannual—or quarterly, upon the plan’s request—basis, according to the fact sheet.

The fact sheet states that the final rule distinguishes the categories of compensation to be disclosed as “direct” compensation, which is received directly from the plan, and “indirect” compensation derived from other sources, including manufacturer payments, spread compensation, pharmacy recoupment, price protection agreements and other compensation reasonably expected to be received that is not specifically disclosed.

Semiannual Disclosures

Covered service providers must provide to the plan ongoing disclosures of compensation received for services within 30 days after each six-month period ends, or after each quarter, if the plan requests quarterly disclosures, according to the fact sheet. The disclosures must describe compensation actually received during the specified period, rather than amounts reported as reasonably expected per the initial disclosures.

The compensation would be presented in the same categories as the initial disclosures: direct, indirect and other compensation, the fact sheet stated.

Audit Rights

The final rule gives group health plans a right to audit PBM disclosures and full discretion to choose the auditor, as well as prohibitions on limiting auditor selection, Aronowitz said during the event. The rule also bans restrictive conditions imposed by PBMs, including audit location, record quantity and access to contracts with pharmacies or drug manufacturers.

As part of the audit, costs are apportioned between plans and PBMs, while allowing PBMs to require reasonable confidentiality agreements to protect and appropriately restrict the use of disclosed information.

Innocent Fiduciary Exemption

The final rule provides what Aronowitz called the “innocent fiduciary exemption”: an administrative exemption to fiduciaries of a group health plan when a PBM fails to meet its required disclosures. To rely on the exemption, fiduciaries must notify the department, seek correction from the covered service provider and determine whether to continue or terminate the contract or arrangement, while documenting the basis for that decision.

The final rule takes effect 60 days after publication in the Federal Register. Its requirements apply to plan years beginning on or after July 1, 2027.