Labor Dept. Finalizes PBM Transparency Rule
A new transparency rule from the administration will require pharmacy benefit managers to disclose the details of their fees and compensation for providing drug coverage (The Wall Street Journal, subscription).
What’s going on: Under a Department of Labor rule finalized last week, PBMs “will have to provide their employer clients with granular information about the prices they pay for pharmaceuticals, as well as payments they receive from drugmakers,” starting in July 2027.
- The new rule aims to address rising healthcare costs, in line with an April 2025 executive order and the administration’s pledge to reform PBMs.
- The rule will apply to self-insured employers.
Why it’s important: PBMs—largely unregulated industry middlemen whose reform the NAM has long urged Congress to undertake—drive up medication costs, despite claiming to lower them.
- The new rule is expected to reduce drug costs by $22 billion over 10 years, according to estimates from the Employee Benefits Security Administration (Insurance Business).
The bottom line: “Under the new rule, PBMs will have to tell employers upfront about compensation they expect to receive from drug manufacturers and pharmacies.”
- Employers will also have the right to audit their PBMs, which must disclose rebates and other payments they receive from drugmakers.
- PBMs will need to explain to employers and the public about “spread pricing,” a practice in which an employer pays more for a medication than the pharmacy receives in reimbursement for the same prescription.
- This transparency on once-opaque PBM practices will likely lead to lower list prices for drugs and empower employers to better manage healthcare costs.
