Final Rule – Pharmacy Benefit Manager (PBM) Compensation Disclosure Requirements:

What employers need to know

Prescription drug costs continue to represent a significant portion of employer-sponsored health plan spending. At the same time, the financial arrangements between PBMs, drug manufacturers, pharmacies and other entities have historically made it difficult for employers to understand exactly how their PBMs are compensated. In April 2025, President Trump signed an executive order to lower drug prices which, amongst other things, directed the DOL to improve transparency into the direct and indirect compensation/fees that PBMs receive.

In support of the 2025 executive order and the amended ERISA disclosure requirements enacted under the Consolidated Appropriations Act, 2026 (CAA, 2026), the Department of Labor (DOL) recently released a PBM Fee Disclosure final rule providing much needed guidance to implement the PBM compensation disclosure requirements.

IMA Compliance note: Compensation disclosure requirements for PBMs and other service providers are required due to the amended ERISA code passed via the CAA, 2026.

There is uncertainty in how to implement the CAA, 2026 changes, and the DOL has been asked to provide guidance. The PBM final rule ties into the request for guidance, however, we’re still waiting for guidance to address CAA, 2026 disclosure requirements for other service providers.

The Department of Labor (DOL) final rule focuses specifically on PBM disclosure obligations and provides the framework for how the PBM’s (and PBM affiliated brokers) compensation, financial arrangements, and potential conflicts of interest must be disclosed to plan fiduciaries.

The disclosures are intended to enable plan fiduciaries to satisfy their responsibilities under ERISA when selecting and monitoring plan service providers. Review the FAQs below to learn more.

Which employers should know about this final rule? Employers who are sponsoring large, self-insured group health plans subject to ERISA. The DOL defined “large” as plans offered by employers with 100 or more employees.

The final rule described herein clarifies specific disclosure obligations for PBMs and PBM affiliated brokers which were enacted by CAA, 2026, which amongst other things, amended ERISA code that has led to the PBM compensation disclosure requirements.

When will PBMs and PBM affiliated brokers need to comply with the disclosure requirements? They will need to comply starting with plan years beginning on or after July 1, 2027.

Do PBMs and PBM affiliated brokers need to provide advance disclosure ahead of renewals beginning on or after July 1, 2027? Yes, a 90-day advance disclosure is required.

Ongoing disclosures are also required no later than 30 days after each semiannual period. The final rule also adds that if the plan requests quarterly disclosures, the PBM or PBM broker must provide them.

Plan Fiduciary Tip: the ongoing disclosures will generally show the actual compensation received (or expected to be received), and from which entity, during the reporting period. Therefore, plan fiduciaries should create a PBM fee disclosure review either semi-annually or quarterly to compare the actual compensation against what was disclosed when the arrangement was established.  

What must the PBM or PBM affiliated broker disclose?

In general, they will disclose the amount of compensation, how they are being compensated, and where that compensation comes from.

To learn what the disclosures must specifically contain, click here for a comprehensive review.

What action is required of an employer administering a large, self-insured group health plan?

The PBM final rule itself doesn’t impose requirements on a group health plan sponsor. However, the executive order signed in 2025, the CAA, 2026 amendments to ERISA code and the PBM final rule are all meant to improve transparency for purposes of group health plans to exercise its ERISA plan fiduciary duties. To that end, the action below should be considered:

Starting with plan year renewals on or after 7/1/26, plan fiduciaries should request and monitor the new PBM compensation disclosures. This would include establishing set frequencies to review PBM compensation to evaluate for the following:

• conflicts of interest
• actual compensation compared against what was disclosed originally
• determine what, if any, further action needs to be taken to comply with ERISA fiduciary responsibilities

For more information, contact your IMA broker team.

IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information. This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.

Author