On January 29, 2026, the Department of Labor (“DOL”) issued a Proposed Rule, Improving Transparency into Pharmacy Benefit Manager Fee Disclosure (the “Proposed Rule”), intended to provide transparency into PBM compensation arrangements.

The Proposed Rule would require PBMs and affiliated brokers or consultants that provide services to self-insured group health plans subject to ERISA to disclose specific information about their compensation to plan fiduciaries.

PBMs perform various functions on behalf of self-insured group health plans, such as establishing pharmacy networks, negotiating pharmacy reimbursement amounts, negotiating prescription drug rebates with manufacturers, and processing prescription drug claims. In connection with these services, PBMs receive compensation from various sources in the prescription drug supply chain via complex arrangements that frequently are not fully disclosed to plan sponsors. Brokers and consultants who provide PBM-related advice or recommendations to self-insured group health plans may also receive compensation from similar complex arrangements.

The Proposed Rule is intended to provide “much needed transparency” into PBM compensation arrangements so that plan fiduciaries are able to assess the reasonableness of PBM administrative services agreements and compensation arrangements. The Proposed Rule attempts to provide this transparency by:

• Requiring PBMs to provide written disclosures of the PBM’s direct and indirect compensation, including manufacturer rebates and fees, spread pricing compensation, and copay “claw-back” amounts recouped from pharmacies reasonably in advance of entering into or renewing a service arrangement (including at least 30 days before renewals);
• Establishing audit provisions designed to ensure that plan fiduciaries can verify the accuracy of the disclosures; and
• Providing relief for plan fiduciaries if the PBM fails to meet its disclosure obligations.

Importantly, the Proposed Rule would require PBMs to disclose compensation as a monetary amount (even if estimated), rather than providing formulas, which are notoriously difficult for fiduciaries to assess when evaluating reasonableness.

ERISA prohibits plan fiduciaries from causing a plan to engage a plan service provider (including a PBM) unless the services are necessary for plan administration and the service provider’s compensation is reasonable. The Proposed Rule would require plan fiduciaries to obtain the new disclosures described above as part of satisfying these requirements with respect to the plan’s PBM arrangement. In light of the Supreme Court’s decision in Cunningham v. Cornell, fiduciaries should be prepared to show that PBM compensation arrangements meet ERISA’s reasonableness requirement (see our prior Client Alert here).

Comments on the Proposed Rule will be due within 60 days following publication in the Federal Register. If finalized, the Proposed Rule would significantly expand PBM disclosure obligations, assisting plan fiduciaries in meeting their ERISA fiduciary duties.