New federal disclosure requirements will give employers a closer look at PBM compensation, pharmacy payments and prescription drug spending.
By Ron Lanton
For years, employers have questioned how pharmacy benefit managers (PBMs) make money from the prescription drug benefits they administer. Pharmacies have raised similar concerns about reimbursement rates, spread pricing and fees collected after prescriptions are dispensed. A new federal rule will require greater disclosure of these financial arrangements.
On October 29, 2026, the U.S. Department of Labor finalized regulations requiring PBMs and certain related service providers to disclose more information about their compensation to covered self-insured employer health plans. The rule is intended to help employers understand how PBMs are paid and determine whether the compensation arrangements in their contracts are reasonable.
The required disclosures include manufacturer rebates, spread compensation, certain pharmacy fees and recoupments, and payments involving PBM-affiliated companies. Spread compensation occurs when a health plan pays a PBM more for a prescription than the PBM reimburses the dispensing pharmacy. Employers will also have the ability to audit the disclosures and examine supporting financial information.
For employers, this represents a significant change in how they can evaluate prescription drug spending. Administrative fees listed in a PBM contract may not reflect all the compensation a PBM receives. The new requirements will provide more information about those additional payments and allow employers to determine whether their existing contracts provide adequate financial oversight.
The rule also carries implications for pharmacies. For years, pharmacy owners have questioned the difference between what health plans pay for prescriptions and what dispensing pharmacies receive. As employers obtain more information about PBM compensation, they may begin asking harder questions about reimbursement arrangements, network participation and the financial terms of their pharmacy benefit contracts.
Although the rule does not directly change pharmacy reimbursement rates or give pharmacies independent access to employer disclosures, it may influence how employers evaluate their PBM relationships and negotiate future agreements.
Employers also have responsibilities under the Employee Retirement Income Security Act (ERISA) to determine whether compensation paid to plan service providers is reasonable. The additional disclosures will assist with those evaluations, but employers should still examine their existing PBM contracts, compensation provisions and audit rights.
The new requirements apply to covered plan years beginning on or after July 1, 2027. For calendar-year plans, that generally means January 1, 2028.
For healthcare organizations, employers and pharmacies, the rule is another reason to pay attention to the terms governing prescription drug benefits. PBM contracts can involve complicated reimbursement provisions, confidentiality requirements, financial incentives and compliance obligations. Understanding how those provisions operate is important when evaluating existing agreements or negotiating new ones.
At Lanton, Lanton & Sosa Law, we advise pharmacies, healthcare organizations and businesses on PBM contracting, reimbursement disputes and regulatory compliance. Our attorneys also assist clients with evaluating how federal and state PBM requirements affect their existing agreements and operations.
If your organization has questions about PBM contracting, pharmacy reimbursement or compliance with the new requirements, contact Lanton, Lanton & Sosa Law to discuss your legal needs.
Ron Lanton is Senior Partner and Global Strategist at Lanton, Lanton & Sosa Law PLLC.
This article is for informational purposes and does not constitute legal advice.
Source: U.S. Department of Labor, Pharmacy Benefit Manager Fee Disclosure Final Rule