Labor Department proposes semiannual disclosures for pharmacy benefit managers starting in 2027
Key Facts
The U.S. Department of Labor plans to require pharmacy benefit managers to provide employers with more detail about their sources of compensation under a proposed regulation that the department said aims to reduce health care costs. The rule was still a proposal when initial details were published, and the department said it would share more details on October 29. According to The Wall Street Journal, it would apply to employers that self-fund their health plans, with implementation scheduled to begin in July 2027. The department links the initiative to President Donald Trump’s Executive Order No. 14273, which addresses lowering drug prices. That places disclosure of intermediary payments within a broader effort to address drug costs, without meaning that prices have already fallen.
The proposal would require benefit managers to disclose expected compensation in advance, then provide revenue updates every six months. The information would include rebates and other payments they receive from drugmakers, including amounts that may influence patients’ direction toward particular drugs. The disclosures would also cover group purchasing organizations affiliated with benefit managers. This scope is intended to reveal income sources that may not be clear to employers when they contract or monitor their plan costs. The department says the proposal follows the structure of previous disclosure rules, adopted in 2012 for service providers to certain retirement plans under ERISA.
The proposal also addresses what is known as spread pricing, in which an employer pays a pharmacy more for a drug than the pharmacy actually receives. This arrangement creates a gap between the reimbursement cost borne by the plan and the amount paid to the dispensing outlet, which the rule would require to be disclosed among payment details. The proposal published in January 2026 covers certain brokers and consultants affiliated with pharmacy benefit managers, as well as the managers themselves. It also allows fiduciaries of health plans to audit the accuracy of disclosures. This makes verification part of the governance tools the proposal gives plan sponsors.
The proposed audit comes in a market where prescription management is concentrated among a small number of companies. The Federal Trade Commission said the three largest benefit managers processed nearly 80% of the roughly 6.6 billion prescriptions dispensed in the United States in 2023. In its 2024 report, the commission said the six largest managers handled 94% of the country’s prescription drug claims. The commission also said in January 2025 that the three largest managers generated more than $7.3 billion in revenue from dispensing specialty drugs through their affiliated pharmacies, above their estimated acquisition costs, during 2017–2022. These figures increase the importance of disclosing payments and relationships tied to prescription benefit management, a function the Department of Labor said covers self-funded plans for about 90 million people.
Costs carry weight for employers, as drug spending accounts for a quarter of their health care spending and was expected to rise 12% in 2026, according to a survey cited by Becker’s Payer Issues from Business Group on Health. A Labor Department official said reducing health care costs is the proposal’s goal, in line with an executive order issued in April 2025. But the stated goal does not establish that the rule will reduce drug prices or plan spending once implemented. The department had extended the proposal’s comment period by 15 days, to April 15, 2026, to allow comments on aligning it with new legislative provisions added to ERISA. The department said the extension gives parties time to consider how to coordinate the proposal with the new legal requirements.