The U.S. Department of Labor (DOL) and Employee Benefits Security Administration (EBSA) issued newly proposed regulations on pharmacy benefit manager (PBM) fee disclosures.
The proposed regulations would require PBMs to make disclosures to self-insured group health plan fiduciaries that would allow them to assess the reasonableness of compensation for the PBM’s services and to fulfill their duties under ERISA. More information can be found in a recent WTW Insider article: DOL issues proposed guidance on PBM fee disclosure.
The Q&As below discuss the DOL’s proposed PBM fee disclosure regulations (which are separate from the PBM disclosure requirements included in the Consolidated Appropriations Act, 2026).
Q: Do the proposed regulations require that PBMs provide disclosures to both self-insured and fully insured group health plans?
No. The newly proposed regulations would require PBMs to disclose the information described below to employer plan sponsors of self-insured group health plans. The proposed regulations would not apply to fully insured group health plans, as they are specifically excluded from the definition of “covered plan.”
Q: What entities are subject to the disclosure requirements?
The proposed regulations would apply to “covered service providers.” As defined, this includes providers of PBM services as well as providers of advice, recommendations or referrals regarding PBM services who are themselves providers of PBM services or their affiliates.
Q: What constitutes “pharmacy benefit management services” under the proposed regulations?
Pharmacy benefit management services are defined in the proposed regulations as services necessary for the management or administration of a covered plan’s prescription drug benefits (including the covered plan’s provision of prescription drugs through the plan’s medical benefit). Following are examples included in the proposed regulations:
Q: When are PBMs required to provide disclosures to employers?
The proposed regulations would require PBMs to provide an initial disclosure and a semiannual disclosure to employer plan sponsors. The initial disclosure must be provided within a reasonable time period prior to entering into, extending or renewing a service contract or arrangement with an employer plan sponsor (for extensions and renewals, 30 calendar days in advance is deemed to be reasonable). The semiannual disclosure must be provided no later than 30 calendar days after the end of each six-month period beginning on the date the employer plan sponsors entered into the contract or arrangement, with respect to the preceding six-month period.
Q: What information must be included in the disclosure to employers?
The following information must be included in the initial disclosure to employer plan sponsors of self-insured group health plans:
The content of the semiannual disclosures would generally track the specific categories of compensation that were estimated in the initial disclosures; however, the semiannual disclosures would contain amounts of compensation actually received (rather than estimates) for each of these categories. In addition, if any category of compensation described in the initial disclosure materially exceeds its estimate, the semiannual disclosures must explain the overage.
Q: Are there any requirements as to the form and manner of the required disclosures?
Yes. The proposed regulations provide that the disclosures must be ‘‘clear and concise, free of misrepresentation, and contain sufficient specificity to permit evaluation of the reasonableness of the contract or arrangement.” Required descriptions of compensation amounts must be expressed as a monetary amount, which may be estimated if the actual amount is not reasonably ascertainable. In any event, the descriptions must be sufficient and specific enough to allow plan fiduciaries to assess whether the PBM’s compensation is reasonable.
Q: Do employers have the right to audit the PBMs?
Yes. Under the proposed regulations, an employer plan sponsor may request, in writing, an audit to check the accuracy of any disclosure, at least once a year. The plan sponsor also has the right to select an auditor, and the PBM cannot impose any limitations on the selection of the auditor. The plan would be responsible for all expenses related to the selection and retention of the auditor, while the PBM would bear the cost of providing the requested information.
Q: Are employer plan sponsors subject to penalties if a PBM fails to timely disclose the applicable information?
No, if certain requirements are satisfied. The proposed regulations include an exemption under the prohibited transaction rules for employer plan sponsors if a PBM fails to comply with the disclosure requirements. Specifically, they provide a responsible plan fiduciary (i.e., the employer) with relief if, among other things, the responsible plan fiduciary did not know that the PBM failed to comply with the disclosure requirements and ‘‘reasonably believed’’ that the regulatory requirements were satisfied. Upon discovery of a failure, the responsible plan fiduciary must request in writing that the PBM correct the failure; if the PBM fails to comply with the written request within 90 calendar days, the responsible plan fiduciary must notify the DOL.
Q: When are the proposed regulations effective?
As proposed, the regulations would be effective 60 days after the final regulations are published and apply for plan years beginning on or after July 1, 2026. However, it is unclear when final regulations will be issued.
