Self-insured employers gain rebate, spread payment and audit rights from July 2027 under a Department of Labor rule
For years, employers that pay for their workers’ prescriptions have been asked to trust their pharmacy benefit manager (PBM) on price. Many say they still can’t see how much that middleman keeps along the way.
That changed Oct. 29, when the U.S. Department of Labor (DOL) finalized a rule requiring PBMs to disclose their fees and compensation to large self-insured employer health plans. The rule takes effect in July 2027, and regulators expect it to cut drug costs for employers and workers by $22 billion over a decade, Healthcare Dive reported. The Department of Labor’s announcement of the final rule says PBMs have been collecting fees out of view.
The Employee Benefits Security Administration (EBSA) wrote the rule under the Employee Retirement Income Security Act (ERISA). It covers PBMs serving large, employer-sponsored, self-insured group health plans, plus affiliated brokers and consultants, according to the Federal Register filing.
What PBMs now have to hand over
PBMs must report the rebates they negotiate with drugmakers and any spread payments, the money a PBM keeps when a plan pays more for a drug than the PBM pays the pharmacy. They owe that information when a contract is negotiated or renewed and again every six months, and employers get an annual audit right. PBMs that don’t comply face financial penalties and could see their contracts voided, Healthcare Dive reported.
Just under half of large employers say they get enough insight into what drugmakers pay their health plan or PBM, according to KFF’s 2026 Employer Health Benefits Survey. Meanwhile, WTW projects drug costs will climb 11.5 percent in 2026, up from 9 percent last year.
HRD America reported in October that pharmacy benefit rebates are rising while employer drug costs keep climbing. A bigger rebate guarantee, that report found, doesn’t mean a self-funded employer is paying less for drugs.
Employers were already pulling back from the big PBMs
The rule lands as self-funded employers move business away from the three largest pharmacy benefit managers ahead of federal rebate pass-through requirements that apply to plan years beginning on or after Aug. 3, 2028, HRD America found.
Daniel Aronowitz, who heads EBSA at the Department of Labor in Washington, D.C., said the department is “opening the black box and keeping it open forever,” the Plan Sponsor Council of America reported. He expects fees to fall over time, the way they did after 401(k) service providers had to disclose theirs.
Employers with full access to medical and pharmacy claims data used an average of 11.9 high-value purchasing strategies, compared with 7.9 for those with limited or uncertain access, according to the National Alliance of Healthcare Purchaser Coalitions’ 2026 Pulse of the Purchaser survey.
The PBM industry says it’s unnecessary
The Pharmaceutical Care Management Association (PCMA), the main PBM trade group, doesn’t see the need. David Marin, PCMA’s president and CEO in Washington, D.C., called the rule “a solution in search of a problem.” He said claim-by-claim transparency is already federal law under the Consolidated Appropriations Act of 2026 (CAA), Healthcare Dive reported.
PBM groups also told the department during the comment period that it lacks the legal authority to demand the disclosures. EBSA calls the two sets of rules complementary. The CAA requires after-the-fact reporting on drug spending, while the DOL rule requires disclosure up front so plans can compare PBMs before they sign. The department estimates compliance will cost PBMs about $1 million in the first year and $300,000 a year after that.
Plan sponsors have until July 2027 to review PBM contracts for disclosure terms and decide how they’ll use the data.
