The PBM rule is final. Now the homework is yours.

Employers have been told to trust their pharmacy benefit manager on price. On October 29, the Department of Labor announced a rule that asks for receipts instead. [3]

The final PBM fee-disclosure rule was published in the Federal Register on November 2. It takes effect January 4, 2027, and applies to plan years beginning on or after July 1, 2027. For a calendar-year plan, that means January 1, 2028. [1]

That sounds far away. It isn’t. Your next PBM renewal is where this gets decided.

Who it covers

The rule covers large, self-insured group health plans subject to ERISA. Its definitions reach plans of specified large employers and specified large plans; generally, the relevant threshold is an average of at least 100 employees or plan participants, with counting and aggregation rules that matter. Fully insured plans are outside this PBM-specific rule. Do not decide applicability from a headcount alone—have your advisor or ERISA counsel check your arrangement. [1]

Covered providers must reasonably expect to receive at least $1,000 in direct or indirect compensation in connection with the services. If your TPA or carrier contracts to provide pharmacy benefit management services, that entity can own the disclosure duty and must obtain the information from the PBM doing the work. Calling yourself something other than a PBM does not get you out of it. Providing one covered pharmacy service can be enough. [1]

PBM-affiliated brokers and consultants that advise you on pharmacy services have to disclose too. Read that line twice. [1]

What you’ll get

This is not a one-page fee schedule. Before a new contract, extension, or renewal, covered providers must disclose services and reasonably expected compensation in writing. The rule calls for monetary amounts; good-faith estimates or a pricing methodology are permitted where the amount cannot reasonably be determined. [1]

• Direct fees, by service and in total.
• Manufacturer rebates and other payments, including drug-level information and how much is passed to the plan versus retained.
• Spread compensation by formulary drug and pharmacy channel: what the plan pays, what the pharmacy receives, and the difference. Drugs are identified by NDC—the national drug code.
• Pharmacy clawbacks, price-protection arrangements, and compensation expected when the contract ends.
• Formulary-placement incentives and, where the rule requires it, why alternatives were excluded.
• Net drug price per course of treatment or fill, or the methodology used to determine it.
• A statement of fiduciary status, if applicable, and a statement of the plan’s audit rights.

For an extension or renewal, the DOL treats disclosure 90 days in advance as reasonable. Ongoing reports are due within 30 calendar days after each semiannual period—or each quarter if the plan requests quarterly reporting. They include claim-level spread information. If a reported compensation amount exceeds the initial disclosure by 5% or more, or a lower agreed threshold, the provider must identify and explain the overage. [1] [2]

The plan gets the right to audit at least once a year with an auditor it independently chooses. The provider must supply records and claims- and transaction-level data needed to verify the disclosures, including relevant pharmacy, manufacturer, and rebate-aggregator contracts, subject to reasonable confidentiality protections. Requested information is generally due within 60 calendar days. The plan pays its auditor; the provider pays to produce the information. The audit right covers the period addressed by the required disclosures—not an unlimited historical look-back. [2]

The disclosures must be in plain language. Undefined jargon does not count. Compensation information must also be available in machine-readable form on request. [1]

The part nobody will put in the sales deck

The rule does not make your PBM cheaper. It makes your PBM visible. What you do with that visibility is fiduciary work.

Before you sign or renew, responsible fiduciaries need to obtain and evaluate the disclosures to assess whether the arrangement and compensation are reasonable. After that, they need a process for monitoring the reports and deciding when to exercise the audit right. This is a tool for existing fiduciary responsibilities—not a substitute for judgment. [3]

Failure to satisfy the disclosure requirements can mean the arrangement does not qualify for ERISA’s service-provider prohibited-transaction exemption. The rule provides conditional relief for responsible plan fiduciaries, but it is not automatic. It requires specific steps, including a written request for correction, timely notice to the DOL when required, and a documented decision about continuing or terminating the arrangement. Ask ERISA counsel to map those deadlines before you need them. [1] [2]

A binder full of NDC-level spread data that nobody opened is not a monitoring process.

What to do at your next PBM renewal

These are contracting and oversight recommendations—not a claim that the rule requires every term below.

1. Move the calendar. Ask for disclosures at least 90 days before renewal, even if your first applicable plan year is later. If your broker brings the renewal six weeks out, you have less time to evaluate it.
2. Write the expectations into the contract. Preserve the rule’s audit and data-access rights. Negotiate broader look-back rights if needed, lower reporting thresholds than 5%, notice of material formulary changes, and practical termination terms. Those improvements are not automatically granted by the rule.
3. Ask the termination question now. What does the provider expect to collect if you leave, and how will prepaid amounts be refunded? Review the answer before calling the contract cancellable.
4. Assign a reader. Name who reviews each report, what they compare it against, when they escalate discrepancies, and where the committee’s conclusions are documented.
5. Ask your advisor how they’re paid on pharmacy. The rule expressly reaches covered PBM-affiliated advisors. That does not mean every broker compensation arrangement is covered by this particular rule. Ask about direct and indirect pharmacy compensation anyway.

The bottom line

Drug-level spread data is useful only if someone on your side can read it, test it, and act on it.

For covered plans, the new requirements apply to plan years beginning on or after July 1, 2027. Employers who set the terms at this renewal can prepare before the deadline. Employers who wait risk receiving a pile of disclosures without a process for evaluating them.

If you want to review what your current PBM contract would reveal under the new rule—and which clauses deserve attention before it applies—start with a Benchmark Read.