U.S. Department of Labor Finalizes Sweeping New PBM Fee Disclosure Rules

November 2, 2026

The U.S. Department of Labor (DOL) has issued final regulations aimed at increasing transparency into pharmacy benefit manager (PBM) fees and compensation. The rules generally require PBMs and certain affiliated brokers and consultants serving large, self-insured group health plans to provide detailed compensation disclosures and new audit rights to employer plan sponsors so that they may evaluate PBM arrangements and satisfy their ERISA fiduciary responsibilities. These rules apply for plan years beginning on or after July 1, 2027.

Background

Earlier this year, the DOL proposed PBM compensation transparency regulations. Shortly thereafter, Congress separately enacted related PBM reforms under the Consolidated Appropriations Act, 2026 (CAA 2026). DOL has now finalized its regulations, establishing specific PBM disclosure, reporting and audit requirements. While the final rules reflect certain CAA 2026 changes to ERISA’s service-provider disclosure requirements, they are distinct from the broader PBM reforms enacted under CAA 2026. These final rules generally apply to PBMs and certain affiliated brokers and consultants that provide PBM services to large, self-insured group health plans and expect to receive at least $1,000 in compensation. These rules are intended to help plan fiduciaries evaluate whether PBM arrangements and compensation are reasonable under ERISA, reinforcing the importance of PBM compensation review as part of plan fiduciary oversight.

PBM Disclosure Requirements

PBMs will be required to make both initial and ongoing disclosures regarding their compensation and other financial arrangements.

Initial Disclosures. Reasonably before entering into, extending or renewing an arrangement, PBMs must disclose their services and expected direct and indirect compensation, including certain compensation received by related parties. For renewals and extensions, disclosure at least 90 days in advance is considered reasonable, giving employers time to review the information before renewal. Some examples of the required initial disclosures include:

1. Direct compensation from the plan or plan sponsor.

2. Manufacturer payments, including rebates, fees and discounts and amounts retained or passed through to the plan.

3. Spread compensation information describing the difference between amounts paid by the plan and amounts paid to pharmacies.

4. Pharmacy recoupments, including claw-backs and retroactive adjustments.

5. Price protection arrangements with manufacturers.

6. Other compensation received in connection with the arrangement.

7. Formulary placement incentives that may affect drug placement; and

8. Drug pricing methodology, including the net price after rebates and fees or the methodology used to determine it.

   
   

The initial disclosure must also state and explain the plan’s audit rights and, where applicable, whether the PBM expects to act as a fiduciary with respect to the plan.

Ongoing Disclosures. After the initial disclosures, PBMs must report actual compensation received under the arrangement within 30 days after each semiannual reporting period, or quarterly if requested by the plan. The ongoing disclosures generally cover the same categories as the initial disclosures, allowing fiduciaries to compare expected and actual compensation. If actual compensation exceeds the amount initially disclosed by 5% or more, or a lower agreed-upon threshold, the PBM generally must explain the difference.

Plan Audit Rights

The final rule also gives employer plan sponsors the right to audit PBM disclosures at least annually and to independently select the auditor. The audit may include relevant records, claims and transaction-level data, as well as certain PBM contracts with pharmacies, drug manufacturers and rebate aggregators, subject to reasonable confidentiality protections. The plan may be responsible for paying the auditor, while the PBM bears the cost of producing the requested information.

Effective Date

The final rule applies to plan years beginning on or after July 1, 2027, meaning calendar-year plans will first be subject to the requirements on January 1, 2028. However, related ERISA service-provider compensation disclosure requirements have been in effect since February 3, 2026, with DOL providing temporary good-faith enforcement relief until the final rule applies. Because initial disclosures must be provided before entering into, renewing or extending a PBM arrangement, plan sponsors may need to address the new requirements before their first applicable plan year.

Implications for Employers

The new disclosures should give employer plan sponsors greater visibility into PBM compensation, but employers will also need a process for reviewing and using that information to evaluate whether PBM arrangements and compensation are reasonable. Employer plan sponsors should consider:

1. Reviewing PBM contracts and renewal dates to determine when the new requirements will apply.

2. Establishing a process to review PBM disclosures, including comparing expected and actual compensation and identifying potential conflicts.

3. Considering whether to request quarterly reporting instead of semiannual reporting.

4. Determining when and how to use the plan’s audit rights; and

5. Documenting the review process and any follow-up actions taken.

   
   

Plan sponsors should also consider these requirements alongside the separate PBM transparency, reporting and rebate provisions enacted under CAA 2026, which will generally apply on a later timetable. We will provide updates as any future guidance is issued. Should you have questions in the meantime, please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.