Pharmacy benefit managers must disclose rebates, spread, pharmacy clawbacks and price protection payments to fiduciaries of large self-insured ERISA plans for plan years beginning on or after July 1, 2027, under a final rule the Department of Labor announced on October 29, 2026. Its impact analysis values the result at $818.4 million a year: a 1% cut in drug prices on $81.8 billion of spend for 52.9 million adults.
The 305-page Improving Transparency into Pharmacy Benefit Manager Fee Disclosure (RIN 1210-AB37) reached Federal Register public inspection on October 30 and publishes on November 2. It takes effect 60 days later and implements ERISA section 408(b)(2)(B), as amended by the Consolidated Appropriations Act, 2026 on February 3.
Labor Secretary Keith Sonderling called it "a win for every American worker who has ever paid too much at the pharmacy counter," Healthcare Dive reported. The rule's background section cites the Business Group on Health's 2026 survey (August 2025), in which employers expect pharmacy costs to rise 11% to 12% in 2025 into 2026.
Key Takeaways
- The Department prices the rule at a 1% drug price reduction, an $818.4 million annual transfer to plans and participants, within a range of $409.2 million to $1,636.9 million.
- The same document puts spread at 10% to 15% of PBM revenue and cites $1.4 billion of spread on 51 drugs at the three largest PBMs over 2017 to 2022.
- Per covered adult the transfer is about $15 a year, 1% of $217.98 per fill on 7.1 fills, against a self-insured drug spend of $1,548 per person.
- Initial disclosures are due 90 days before a renewal, actuals follow semiannually, and any category running 5% or more over its estimate needs a written explanation.
- Fully insured plans are excluded, and the 100% rebate pass-through under ERISA 408(b)(2)(C) does not apply until plan years beginning on or after August 3, 2028.
What the rule requires and when
A covered service provider is a PBM, or an affiliated broker or consultant, expecting $1,000 or more in aggregate annual compensation from a covered plan. A TPA or insurer that subcontracts the pharmacy benefit is covered too.
Covered plans are self-insured ERISA group health plans of employers averaging at least 100 employees, or plans with at least 100 participants, in the prior year. Fully insured plans are out; the Department is "reserving for future action more detailed regulatory disclosure obligations with respect to these plans."
Initial disclosures are due 90 days before an extension or renewal, up from 30 days in the January proposal. They cover direct compensation and four indirect categories: manufacturer payments, spread by retail, mail and specialty channel, pharmacy recoupment including copay clawbacks, and price protection. Manufacturer payments are shown per formulary drug, with retained and passed-through amounts separated.
Semiannual reports, or quarterly on request, give the amounts actually received. When any category runs 5% or more over its estimate, the PBM owes a written overage explanation. Once a year the plan may audit; the PBM has 10 business days to acknowledge and 60 calendar days to produce claims-level data and its pharmacy, manufacturer and rebate aggregator contracts.
The arithmetic behind $818.4 million
The regulatory impact analysis starts from 72.4 million participants and beneficiaries in large self-insured ERISA plans, 52.9 million of them aged 18 to 64, each spending $1,548 a year on drugs in 7.1 fills at $217.98 (AHRQ MEPS-HC, 2023). The covered population fills 375.5 million prescriptions and spends $81.8 billion a year.
CBO's 2024 report Alternative Approaches to Reducing Prescription Drug Prices estimated that requiring PBMs to share price information with health plans would lower average net retail prices by 0.1% to 1.0% (CBO, October 2024). The Department took the top of the range after a commenter argued CBO had studied "a narrower set of transparency requirements." One percent of $81.8 billion is $818.4 million; a 0.5% to 2% sensitivity gives $409.2 million to $1,636.9 million.
First-year costs come to $129.6 million, $80.3 million of it PBM systems work. Annualized at 7% the rule costs $60.95 million a year, one dollar for every $13 of transfer.
| Input or output | Figure | Source cited in the rule |
|---|---|---|
| Participants in large self-insured ERISA plans | 72.4 million (52.9 million aged 18 to 64) | DOL tabulation, March 2025 CPS |
| Annual drug spend per privately insured adult | $1,548 ($1,402 insurer, $146 out of pocket) | AHRQ MEPS-HC, 2023 |
| Fills a year and cost per fill | 7.1 fills at $217.98 | AHRQ MEPS-HC, 2023 |
| Covered population drug spend | $81.8 billion on 375.5 million fills | DOL computation |
| Assumed price reduction | 1.0% (sensitivity 0.5% to 2.0%) | CBO, October 2024 |
| Annual transfer, PBMs to plans and participants | $818.4 million ($409.2 million to $1,636.9 million) | DOL RIA summary table |
| Annualized cost, 7% discount rate | $60.95 million | DOL RIA summary table |
| Transfer per covered adult | About $15 a year | actuary.info computation |
Final rule regulatory impact analysis, sections 5, 6.3 and 9.2.2; the per-adult figure is $818.4 million over 52.9 million.
Per covered adult the transfer is about $15 a year, or $1.29 a month. Segal's 2027 survey puts prescription drug trend at 11.5%, which on the rule's $1,548 base adds about $178 per adult in a single year. The federal estimate recovers under a tenth of one year's trend, and the Department's high case stops short of a fifth.
The 1% against the spread figures in the same document
The background section describes revenue streams far larger than 1% of spend. One source found spread "accounted for an estimated 10 to 15 percent of a PBM's revenue" (Colorado Health Institute, August 2018). The Federal Trade Commission found $1.4 billion of spread income at the three largest PBMs on 51 drugs between 2017 and 2022 (FTC, January 2025), about $233 million a year from PBMs the FTC's July 2024 interim report put at nearly 80% of 6.6 billion prescriptions.
In Ohio Medicaid the state auditor found a 31.4% spread on generic claims from April 2017 to March 2019, and the switch to pass-through pricing raised pharmacy payments by 5.7% (Ohio Auditor of State, August 2018; Ohio Department of Medicaid analysis, September 2019).
The Department never reconciles those figures with the 1%. Part of the gap is definitional: CBO's estimate covered price disclosure alone, and the Ohio and FTC figures measure spread, one of four streams the rule exposes. The document also quotes a 2015 paper finding average retail spread below 2%.
Which figure belongs in a 2028 pharmacy budget depends on the contract the plan is leaving; a traditional contract with guaranteed rebates has the most room between the guarantee and the PBM's actual retention. Because the rule neither bans spread nor requires full pass-through, the Department expects PBMs "may not need to offset these revenue sources," and projects the effect to hold where CBO assumed a statutory ban would fade.
PBMs dispute the direction. "It is a solution in search of a problem," David Marin, president and CEO of the Pharmaceutical Care Management Association, said on October 29. His smaller-PBM point has footing in the rule's cost table: $80.3 million of first-year systems cost falls on an industry the Department counts at about 70 full-service PBMs.
Two statutory dates and the plan year between them
Disclosure under 408(b)(2)(B) applies to plan years beginning on or after July 1, 2027. The 100% pass-through of rebates, fees, alternative discounts and other remuneration under new section 408(b)(2)(C), and the drug spending reports under new ERISA section 726, apply to plan years beginning on or after August 3, 2028.
For a calendar-year plan that leaves 2027 outside the rule. The 2028 renewal, with its 90-day lead, is the first at which the fiduciary sees the PBM's estimates before signing. January to June 2028 is the first period reported in actuals, and 2029 is the first plan year priced under the pass-through mandate. A rebate guarantee negotiated in 2026 for 2027 is the last one a calendar-year plan prices without a disclosed retention figure.
Plans whose large claims run through specialty and cell and gene therapy drugs get specialty-channel spread as its own line for the first time.
None of it reaches the fully insured side. By the rule's count 136 million Americans are in ERISA group health plans and 72.4 million in covered plans, so roughly half the ERISA group market keeps the same compensation undisclosed, with no date set for the rulemaking the Department reserved.