DOL Finalizes PBM Fee Disclosure Requirements

On October 29, 2026, the U.S. Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) issued a 350-page final rule requiring providers of pharmacy benefit management services and their affiliated brokers and consultants to disclose fees and compensation received to fiduciaries of covered large, self-insured ERISA group health plans. According to DOL’s accompanying fact sheet, the disclosures will give employers more visibility into the payments PBMs may receive from various sources and help fiduciaries evaluate and monitor arrangements over time. 

The final rule implements transparency reforms enacted as part of the Consolidated Appropriations Act, 2026 (CAA 2026), and advances the objectives of President Trump’s executive order “Lowering Drug Prices by Once Again Putting Americans First.” While the final rule adjusts coverage, reporting, and terminology to comport with the CAA 2026, it does not consolidate all statutory and regulatory obligations or align their implementation dates. 

DOL recognizes that PBMs provide valuable services but emphasizes that compensation from health plans, manufacturers, pharmacies, and other rebate aggregators can be difficult to evaluate. For health plans and PBMs, the practical issue is not simply producing a fee schedule; rather, it is explaining the economics of the arrangement across related entities and supporting those disclosures with auditable data. 

Coverage and Timing 

Unlike the proposed rule, the final rule is limited to large, self-insured plans (generally self-insured plans offered by employers averaging at least 100 employees or qualifying multi- or multiple-employer plans averaging at least 100 participants). Fully insured plans remain excluded. The final rule also excludes plans whose sponsor is, or is affiliated with, a drug manufacturer, distributor, wholesaler, PBM, or rebate aggregator.   

Exclusion from the final rule does not eliminate broader statutory obligations of the CAA 2026. CAA 2026 expanded the statutory covered service provider definition beyond brokers and consultants to broadly encompass providers of enumerated services, including third-party administration and PBM services, which the DOL clarified in the final rule as being effective February 3, 2026.   

The regulation retains the $1,000 expected direct or indirect compensation threshold. Coverage turns on functions, not labels, and includes prescription drugs furnished through a plan’s medical benefit. An insurer or third-party administrator contracting to provide PBM functions may be subject to the rule even when an affiliate, agent, or subcontractor performs the work or receives compensation. Those service entities do not become independently covered solely because they work for the contracting provider, but their relevant compensation and records remain part of the provider’s disclosure and audit responsibilities.  

The rule becomes effective 60 days after Federal Register publication and applies to plan years beginning on or after July 1, 2027, one year later than proposed. Calendar-year plans first fall within that timetable on January 1, 2028. Separate CAA 2026 rebate-remittance and reporting requirements apply to plan years beginning on or after August 3, 2028; this rule does not accelerate them.  

DOL is providing temporary, good-faith enforcement relief from February 3, 2026, until the first day of the plan year beginning on or after July 1, 2027 (January 1, 2028, for calendar-year plans). The policy reaches statutory covered service providers and responsible plan fiduciaries, including those outside this regulation’s narrower scope. For providers, DOL will not treat the statutory disclosures as deficient as long as the provider “made disclosures in accordance with a good faith interpretation” of the amended statute. For responsible plan fiduciaries, DOL separately will not treat entry into an arrangement as a prohibited transaction if the fiduciary acted under a good-faith interpretation of its obligation to determine reasonableness. It is important to note that this is a DOL enforcement policy and not a blanket exemption from ERISA requirements. 

Disclosures, Audit Rights, and ERISA Framework 

The final rule operates within ERISA’s exemption for otherwise prohibited transactions involving service providers. As a result, transparency is relevant not only to commercial negotiations but also to the legal framework governing PBM service arrangements. 

The final rule operates within ERISA’s exemption for otherwise prohibited transactions involving service providers. As a result, transparency is relevant not only to commercial negotiations but also to the legal framework governing PBM service arrangements. Noncompliance with the required disclosures can jeopardize reliance on the exemption and create prohibited-transaction exposure. 

Required disclosures reach relevant compensation of the contracting service provider and its affiliates, agents, and subcontractors, including: 

• Manufacturer payments: Rebates, fees, discounts, and other payments from drug manufacturers and related supply-chain entities, in aggregate and by formulary drug, distinguishing amounts retained from amounts passed through. 
• Spread pricing compensation: This is the difference between what the plan pays the provider and what the provider pays the pharmacy. The final rule expressly requires PBMs to report the underlying charge to the plan and corresponding pharmacy payment by drug/National Drug Code (NDC), claim-level differences in recurring reports, and spread pricing totals by drug and pharmacy channel. 
• Pharmacy recoupments: Copay clawbacks and, as expanded from the proposed rule, other retroactive pharmacy reimbursement adjustments, including transaction counts. 
• Direct and other compensation: Direct fees from the plan or sponsor, both in total and by service, with reasonable, good-faith allocations among bundled services. Disclosures also cover price-protection payments, termination compensation and prepaid refunds, and otherwise undisclosed compensation, identifying its payer, associated services, and payment arrangement. The catch-all includes irregular and contingent payments. 
• Formulary and pricing information: Manufacturer placement incentives, affiliated-pharmacy steering, and net prices per treatment or fill by NDC and pharmacy channel. In specified circumstances involving retained manufacturer or aggregator payments, providers must identify reasonably available therapeutically equivalent alternatives, including biosimilars, and explain their omission. Providers retaining formulary-change authority must explain it and disclose advance-notice and short-notice termination protections for qualifying material changes. If monetary net prices cannot be ascertained, an objectively verifiable methodology is required. 

Initial disclosures are required reasonably in advance of entering into, extending, or renewing a service contract or arrangement. For extensions and renewals of existing contracts, disclosures are due 90 calendar days in advance, extended from the proposed rule’s 30 calendar days. Recurring reports are due within 30 calendar days after each six-month period measured from contract entry, or quarterly if requested. The final rule generally uses semiannual compensation periods, rather than the proposed rule’s quarterly breakdowns within semiannual reports. Ongoing disclosures include compensation received or reasonably expected to be received, as applicable, permitting comparison against initial estimates. If a compensation category exceeds its estimate by at least 5%, or a lower agreed threshold, the provider must identify and explain the overage.  

The rule also allows plan fiduciaries to audit the accuracy of PBM disclosures and provides additional relief for fiduciaries if a PBM fails to meet its obligations. That fiduciary relief is conditional, including requirements to request correction in writing, notify DOL within prescribed deadlines, and, for unresolved failures, determine and document whether to terminate or continue the arrangement consistent with ERISA duty of prudence. 

45 Attorneys General Supported DOL’s Proposed Rule 

As discussed in our April 24, 2026, client alert, a bipartisan coalition of 45 attorneys general (AG) submitted a letter supporting DOL’s proposed PBM transparency rule. The AGs endorsed the proposal, while seeking an express non-preemption statement and recognition of their oversight role. DOL’s final preamble states that the rule does not “alter, expand, or modify” ERISA preemption. It does not categorically resolve whether particular state PBM laws are preempted; that remains governed by applicable law and the facts and circumstances. DOL also preserves lawful information sharing, coordination, and referrals to state AGs. Coupled with the confidentiality exception for regulator disclosures, this reinforces the need to assess federal and state exposure together. 

Implications for Employers, Plan Fiduciaries, PBMs, and Other Covered Service Providers 

Employers, plan fiduciaries, PBMs, and other covered service providers, including affected brokers, consultants, and third-party administrators, should now focus on implementation. Recommended steps include: 

• Map coverage: Identify affected plans, contracting entities, services, compensation recipients, and affiliates under both the CAA 2026 statutory requirements and the narrower PBM-specific regulation. Distinguish fully insured from self-insured arrangements, and customer plans from the company’s own employee plans. Non-PBM providers also should assess statutory coverage based on their services and compensation, rather than assume the PBM rule’s exclusions apply.  
• Build reporting controls: Assign ownership of estimates, bundled allocations, drug- and claim-level data, recurring reports, overage explanations, and machine-readable production. Coordinate information rights across affiliates, agents, and subcontractors, and establish separate processes for fiduciary information requests and corrections. 
• Update contracts: Align terms across upstream pharmacy, manufacturer, and aggregator agreements and downstream administrative services agreements with plan sponsor clients. Address third-party administrators’ applicable statutory compensation-disclosure obligations, even where the PBM-specific regulation does not apply. Ensure upstream agreements permit required disclosures and access to supporting information. 
• Address transition gaps: All covered service providers should review affected arrangements from February 3, 2026, document good-faith statutory interpretations, and address missing or deficient disclosures. Plan fiduciaries should obtain and evaluate those disclosures.  
• Confirm timing and state-law implications. Review the final regulatory text and preamble for effective and applicability dates, transition rules, preemption language, and enforcement coordination before setting compliance deadlines. 

Employers, plan fiduciaries, PBMs, and other covered service providers should review contracts, strengthen reporting systems, and clarify who is responsible for providing and checking compensation information. Compliance will require more than a fee schedule. Disclosures must explain how money flows through the arrangement and be supported by reliable records. Because statutory, regulatory, and state-law requirements may differ in scope and timing, each organization should assess its obligations separately and document its approach. All covered service providers should begin attempting to comply with the broader CAA 2026 statutory disclosure requirements now, subject to DOL’s temporary good-faith enforcement policy. PBMs should use the transition period to prepare for the regulation’s detailed requirements. Employers and responsible plan fiduciaries should request required disclosures, review agreements for applicable disclosure obligations, data-access provisions, and audit rights, and document their evaluation of the reasonableness of services and compensation. They should also establish a process to follow up in writing on missing or unclear information and monitor disclosures over time.