The Department of Labor’s final rule on pharmacy benefit managers landed last Thursday. It runs 305 pages. I did what any well-adjusted adult does with a 305-page federal regulation, which is skip straight to Ctrl+F.
I searched two terms before I read anything else. The first was “ascertainable,” because that word is where the loophole lives that I begged DOL to close in my comment letter last spring. The second was “claims data,” because I have spent more of my professional life than I care to admit fighting PBMs to get my clients’ own data back from them.
Neither search went my way. One of them made me say words my mother calls “unbecoming of a lady.”
But fair is fair. The rest of this rule is a gift to every employer who has ever stared at a PBM invoice and wondered where the money went. Almost everything DOL proposed in January survived, and a lot of it got sharper. In my first post on this rule, I said DOL had turned on the lights and we’d get to watch the cockroaches scramble. The lights are still on.
A quick refresher for new readers. PBMs are the middlemen that run the prescription drug benefit in your health plan, and three of them control roughly 80 percent of the market. They mendaciously claim to save employers money while making a fortune in ways employers never see.
Here’s the bind. If you sponsor a self-funded employee health plan, federal law makes you a fiduciary, responsible for making sure your plan pays only reasonable prices. You can’t judge what you can’t see. That’s the problem this rule tries to solve.
What DOL Just Did, in Plain English
Who it covers: Self-funded health plans of employers with 100 or more employees, plus multiemployer and similar plans with 100 or more participants. That includes level-funded plans, which are self-funded plans with stop-loss insurance built to feel like fully insured ones. Smaller plans get only basic disclosures, and fully insured plans are on hold for a future rulemaking.
When it starts: Plan years beginning on or after July 1, 2027. If your plan runs on the calendar year, your first covered year starts January 1, 2028, and PBMs have to deliver disclosures 90 days before a renewal. So the first ones are due around the first week of October 2027.
What PBMs have to do: Before you sign or renew, the PBM must tell you in writing, in dollars, every way it expects to make money on your plan and who is paying it. Every six months after that (every three months if you ask), it has to report what it actually made and explain any category that came in 5 percent or more over its estimate. Once a year, you can audit the whole thing with an auditor you pick.
Why PBMs can’t ignore it: Under federal benefits law, hiring a vendor for your health plan is a “prohibited transaction” unless the contract is reasonable. Under this rule, a PBM contract without these disclosures is unreasonable by definition. That puts the PBM in violation. It also puts you there, as the employer who signed, unless you follow a specific process I’ll walk through below the paywall.
The Highlights
PBMs have to list, drug by drug, what they charge your plan and what they pay the pharmacy, with the difference spelled out. That difference is called the spread, one of the industry’s favorite places to steal money.
Copay clawbacks have to be disclosed, along with every other way PBMs take money back from pharmacies after the fact.
PBMs have to say whether they’re acting as a fiduciary and update that statement every six months. DOL also put in writing that a contract clause insisting “we are not a fiduciary” changes nothing if the PBM acts like one. I may frame that footnote.
Audit rights got real teeth.
Below the line: every money game the rule now exposes, the two places DOL blew it big time (one of which is unforgivable), exactly how this rule fits with the new law Congress passed in February, and your to-do list.