By: Beckie Fenrick, PharmD, MBA and Jason Peterson, RPh
PBM compensation structures may soon face new federal transparency requirements. In January 2026, the U.S. Department of Labor (DOL) released a proposed rule that would significantly expand PBM fee disclosure requirements for self-insured group health plans.
If finalized, the regulation would require covered service providers to disclose detailed information about both direct and indirect compensation before contracts are executed or renewed—and on a continuing basis thereafter. For employers, TPAs and other plan fiduciaries, the proposal could increase visibility into PBM compensation structures and formalize audit rights during the contracting process.
What is the Proposed PBM Disclosure Rule?
The proposed rule would implement President Trump’s Executive Order 14273 and impose new disclosure and audit obligations on covered service providers that contract with self-insured group health plans to provide pharmacy benefit management services. This would apply to employer-sponsored, self-insured plans only—not to fully insured plans.
If finalized, the rule would require two types of disclosures from covered service providers:
- Initial disclosures, provided before a contract is executed, renewed or extended
- Ongoing semiannual disclosures, provided throughout the life of a contract
Covered Service Providers Under the Proposed PBM Rule
The proposal identifies two categories of covered service providers:
- Providers of pharmacy benefit management services
- Providers of advice, recommendations or referrals related to pharmacy benefit management services, if they are also PBMs or affiliated with a PBM
Any entity that enters into a contract or agreement with a self-insured group health plan to provide PBM services qualifies—regardless of whether those services are performed directly or through affiliates, agents or subcontractors.
To determine who must comply, the regulation defines several key terms:
- Affiliate: Any entity that directly or indirectly controls, is controlled by, or is under common control with a covered service provider, including officers, directors, employees or partners.
- Agent: Any person or entity authorized—expressly or implicitly—to act on behalf of a covered service provider.
- Subcontractor: Any person or entity (including its affiliates) that is not an affiliate of the covered service provider but expects to receive $1,000 or more in compensation under the contract.
Even when services are delegated, the covered service provider remains responsible for delivering complete disclosures and obtaining all required compensation information from affiliates, agents and subcontractors.
New PBM Compensation Disclosure Requirements Before Contract Execution
Before entering into, renewing or extending a PBM contract, covered service providers must provide written disclosures to the plan fiduciary reasonably in advance of execution. The intent is to give fiduciaries a full picture of PBM compensation structures before committing to or renewing an agreement.
The initial disclosure must include:
- A description of the pharmacy benefit management services to be provided
- All direct compensation paid by the self-insured group health plan
- All direct and indirect compensation reasonably expected to be received by the covered service provider, its affiliates, agents or subcontractors from other sources
The proposal specifically identifies the following categories of compensation:
- Payments from drug manufacturers, including formulary placement incentives
- Spread compensation (when the plan pays more for a drug than the pharmacy is reimbursed)
- Pharmacy recoupments or “claw-backs”
- Price protection arrangements
- Termination-related compensation
- Any other compensation to the covered service provider, affiliate, agent or subcontractor received in connection with the service contract
Covered service providers must also provide semiannual updates reporting the same categories based on amounts actually received, allowing fiduciaries to monitor compensation throughout the contract—not just at signing.
Plan Fiduciary Audit Rights Under the Proposed PBM Rule
The proposed rule would grant plan fiduciaries defined audit rights to verify the accuracy of disclosed information.
At a minimum, the regulation would require:
- The right to conduct an audit at least once per year
- No restrictions by the covered service provider on the plan’s selection of the auditor
- Full access for the auditor to records, data and information reasonably necessary to confirm disclosure accuracy — including contracts with retail pharmacies and drug manufacturers (subject to reasonable confidentiality protections)
- The plan to bear the cost of selecting and retaining the auditor
- The covered service provider to bear the cost of providing requested information
- No limitations on the audit period, audit location or number of records reviewed
Covered service providers would also be responsible for obtaining and furnishing relevant information from affiliates, agents and subcontractors as part of the audit process.
TPA Compliance Obligations Under the Proposed PBM Disclosure Rule
If a third-party administrator contracts with a self-insured plan to provide PBM services—even if those services are delegated to another entity—the TPA would be considered a covered service provider under the proposed rule. In that case, the TPA would be responsible for making the required disclosures to the plan fiduciary and obtaining all necessary compensation information from the entity performing the PBM services.
DOL PBM Rule Comment Period and Timeline
The proposed rule is subject to a 60-day public comment period following publication in the Federal Register. The comment period is scheduled to close on March 31, 2026. After reviewing public comments, the DOL may issue a final rule. The effective date of any final rule has not yet been announced.
Preparing for the DOL Proposed PBM Disclosure Rule
If finalized, the rule would formalize structured, ongoing transparency requirements around PBM compensation for self-insured health plans. Plan fiduciaries, brokers and TPAs may want to evaluate how PBM contracts are structured, monitored and audited in light of evolving federal transparency standards.
As regulatory expectations increase, clarity around PBM compensation and contract oversight becomes critical. If you’re evaluating your current PBM arrangements or preparing for potential disclosure requirements, Navion can help bring structure and transparency to the process.
