Federal · DOL final rule, FR Doc. 2026-22306

Pharmacy benefit managers must spell out their pay to large self-insured employer health plans under a new Labor Department rule

Final rule filed Oct. 30, 2026 · Scheduled for publication Nov. 2, 2026 · Applies to plan years beginning on or after July 1, 2027

Published October 31, 2026 · Last updated October 31, 2026

This explainer does not take a side. It describes what the rule does, using the final rule text filed with the Federal Register.

What it does

Federal law (ERISA) lets an employer health plan pay a service provider only if the contract is reasonable and the pay is no more than reasonable. In early 2026, Congress amended that law to say providers of pharmacy benefit management services must disclose their pay to the plan. This rule from the Labor Department’s Employee Benefits Security Administration sets out the timing, manner and content of those disclosures for large self-insured plans. (Final rule, Summary and Executive Summary)

• Before a contract. The PBM (or an affiliated broker or consultant) must give the plan a written description of its services and the pay it expects, reasonably in advance of signing, extending or renewing. For extensions and renewals, 90 calendar days ahead is treated as reasonable. (29 CFR 2550.408b-22(e))
• Every six months. After each six-month period (or each quarter, if the plan asks), the PBM must report what it actually received within 30 calendar days after the period ends. (29 CFR 2550.408b-22(g))
• What gets disclosed. Among other items: rebates, fees, alternative discounts and other payments from drug makers, wholesalers or rebate aggregators, and how much is passed on to the plan versus kept; “spread compensation” (the difference between what the plan is charged for a drug and what the pharmacy is paid); and “copay claw-back” amounts recouped from pharmacies when a worker’s copay is more than the pharmacy’s reimbursement. (29 CFR 2550.408b-22(e)(3) and (g)(2))
• Audit right. At least once a year, at the plan’s written request, the PBM must allow an audit of the accuracy of its disclosures. The plan picks the auditor and pays the auditor; the PBM pays the cost of supplying records, including its contracts with pharmacies, drug makers and rebate aggregators (under confidentiality terms). It must confirm a request within 10 business days and provide the information within 60 calendar days, absent extraordinary circumstances. (29 CFR 2550.408b-22(j))
• Plain wording required. Disclosures must be clear and concise. Undefined industry jargon or legalese can count as not specific enough. (29 CFR 2550.408b-22(k))

Who it affects

• Large self-insured employer health plans. The rule covers self-insured group health plans of employers that averaged at least 100 employees in the prior year, and plans that averaged at least 100 participants. It also reaches limited-scope dental and vision plans of those plans. (29 CFR 2550.408b-22(b) and (m); preamble, Covered Plan)
• Not covered by this rule: plans whose benefits are all provided through an insurance policy (fully insured plans), and plans set up by drug makers, wholesalers, PBMs or rebate aggregators (or their affiliates). (29 CFR 2550.408b-22(b)(1)-(2)) The underlying statute still applies more general disclosure rules to other ERISA plans. (Preamble, Limitation to Large, Self-insured Group Health Plans)
• Government and church plans. ERISA, the law this rule is written under, generally does not apply to governmental plans (such as plans for state and local government workers) or to church plans that have not elected coverage. (29 U.S.C. 1003(b))
• PBMs and affiliated brokers and consultants that expect $1,000 or more in pay in connection with a covered plan. (29 CFR 2550.408b-22(c))

What it means for you

• The disclosures go to the plan, not to workers. The rule requires PBMs to report to the people who run the plan (the “responsible plan fiduciary”), so they can judge whether the PBM’s pay is reasonable. It does not set drug prices, copays or premiums.
• Possible effect on costs, per the Labor Department. The department estimates about 47.2 million people in large self-insured plans used a prescription drug in the past year. Using a Congressional Budget Office estimate of a 1 percent price reduction from PBM disclosures, it projects about $818.4 million a year in lower prescription spending by patients and plans (range $409.2 million to $1.64 billion). It estimates costs of about $60 million a year, mostly for PBM systems, disclosures and audits. These are estimates, not guarantees. (Final rule, Regulatory Impact Analysis)
• Not sure what kind of plan you have? Your employer’s HR or benefits office, or your plan’s summary plan description, can tell you whether the plan is self-insured or fully insured.
• More changes already in law. Separately, the 2026 law requires PBMs to pass through 100% of drug-maker rebates, fees and other payments to group health plans, and to send plans detailed drug-spending reports, for plan years beginning on or after August 3, 2028. Those requirements come from the statute, not this rule. (Final rule, Executive Summary and Background)

Changes from the proposal

The proposal (January 30, 2026) would have applied to all self-insured group health plans. After Congress amended ERISA on February 3, 2026, the department narrowed the final rule to large self-insured plans, set the regular disclosures on a six-month (or quarterly) schedule like the new law, and matched its terms for rebates, spread compensation and drug pricing to the new law. Until the rule applies, the department says it will not take enforcement action against PBMs or plan fiduciaries that follow a good-faith reading of the amended law. (Final rule, Comments on Interaction with the Department’s Rule; Scope of the Final Rule)

Current status

Final rule filed for public inspection October 30, 2026 and scheduled for publication in the Federal Register on November 2, 2026 (FR Doc. 2026-22306; RIN 1210-AB37). It takes effect 60 days after publication and applies to plan years beginning on or after July 1, 2027. There is no comment period. (Final rule, Dates)

What happens next

Plans and PBMs have until plan years starting on or after July 1, 2027 to put the disclosures and audit terms in place. The 2028 rebate pass-through and drug-spending reports in the statute follow later.

Sources

• Federal Register: “Improving Transparency into Pharmacy Benefit Manager Fee Disclosure,” Department of Labor final rule, FR Doc. 2026-22306 (public inspection Oct. 30, 2026; publication Nov. 2, 2026)
• 29 U.S.C. 1003: ERISA coverage (exceptions for governmental and church plans)

Every statement above is drawn from the official source text linked here; section references are shown in grey. This is a plain-English summary, not legal advice. Spot an error? Tell us.