The Department of Labor published a proposed rule on PBM fee disclosure in the Federal Register on January 30, 2026, targeting pharmacy benefit managers that serve ERISA self-insured group health plans. The comment period closed March 31. If finalized on schedule, the rule takes effect for plan years beginning on or after July 1, 2026.
The rule would require PBMs to disclose all sources of compensation: direct fees, manufacturer rebates, spread pricing margins, copay claw-backs, and inflation protection payments. It also grants plan fiduciaries non-waivable annual audit rights over pharmacy and manufacturer contracts. PBMs that fail to comply lose their ERISA Section 408(b)(2) prohibited transaction exemption, exposing both the PBM and the plan sponsor to DOL enforcement and civil penalties.
Who It Affects
Self-insured employer health plans cover roughly 65% of employer-covered workers, and nearly all route pharmacy benefits through a PBM. The rule’s impact concentrates on mid-to-large self-insured employers, Taft-Hartley funds, and public-entity health plans whose pharmacy spend runs through contracts with opaque spread pricing or retained rebate arrangements. If your plan’s PBM retains any portion of manufacturer rebates or earns a spread on drug pricing, this rule changes what you can see and what you owe.
The Reserve Mechanism
The disclosure rule affects reserves through two channels: the expected claim ratio for pharmacy costs and a new contingent fiduciary liability.
On the pharmacy claims side, many self-insured plans currently book health plan IBNR based on paid claims data that embeds PBM spread pricing and retained rebates. When those hidden margins become visible, the effective cost per prescription may drop. Plans that discover inflated costs will need to revise their pharmacy trend assumption and, potentially, lower the expected claim ratio used in Bornhuetter-Ferguson or expected-claims projections for the pharmacy component. Industry estimates of retained PBM compensation range from 2% to 8% of gross pharmacy spend, though plan-specific figures will vary widely once disclosures begin.
On the fiduciary liability side, if a plan’s PBM contract does not meet the new disclosure standards, the arrangement becomes a prohibited transaction under ERISA. Plan fiduciaries face potential excise taxes, DOL enforcement actions, and participant lawsuits. For plans that have not yet renegotiated their PBM contracts, this creates a contingent liability that may warrant a separate reserve estimate. The Consolidated Appropriations Act of 2026, which separately mandates 100% rebate pass-through, reinforces this exposure from a statutory direction.
The net effect could be paradoxical: pharmacy claims reserves may decrease (as hidden costs are stripped out) while fiduciary liability reserves may need to increase (as compliance gaps are quantified).
What to Ask Your Actuary
- How much of our current pharmacy IBNR reflects PBM spread and retained rebates that we would recover under full pass-through requirements? Should we model a lower pharmacy trend for plan years beginning after July 1?
- Should we establish a separate ERISA fiduciary liability reserve for potential prohibited transaction exposure if our PBM contract does not yet meet the proposed disclosure standards?
- What is the expected impact on our pharmacy claims trend if PBM compensation is de-linked from drug prices, as required by the Consolidated Appropriations Act?
What to Watch Next
The key date is whether the DOL finalizes the rule before the July 1, 2026, plan-year trigger. If the rule is delayed or weakened during finalization, the Consolidated Appropriations Act’s rebate pass-through mandate still takes effect independently, but the comprehensive disclosure and audit framework would be deferred. Watch for a final rule publication in the Federal Register, likely in May or June. If your plan year begins July 1 or later, the window to renegotiate your PBM contract is already closing.