DOL Pharmacy Benefit Manager Fee Disclosure Rule Takes Effect January 4, 2027

On November 2, 2026, the U.S. Department of Labor's Employee Benefits Security Administration (EBSA) published a final rule requiring pharmacy benefit managers and affiliated brokers and consultants to disclose their compensation to fiduciaries of large self-insured group health plans under the Employee Retirement Income Security Act (ERISA). The rule takes effect January 4, 2027, and applies to plan years beginning on or after July 1, 2027.

EBSA announced the rule on October 29, 2026. It responds to section 12 of Executive Order 14273, Lowering Drug Prices by Once Again Putting Americans First, and adds a new regulation at 29 CFR 2550.408b-22 following a proposed rule published January 30, 2026.

What the Final Rule Requires Pharmacy Benefit Managers to Disclose

The rule applies to a "covered service provider" that contracts with a covered plan and reasonably expects $1,000 or more in direct or indirect compensation for pharmacy benefit management services. It also reaches a pharmacy benefit manager or its affiliate that gives advice, recommendations or referrals about those services, whether or not the entity calls itself a pharmacy benefit manager.

The provider must give the responsible plan fiduciary a written initial disclosure reasonably in advance of a new, extended or renewed contract, and 90 calendar days is deemed reasonable for extensions and renewals. The disclosure must describe direct compensation, rebates and other payments from drug manufacturers, spread compensation by drug and pharmacy channel, copay claw-backs and other pharmacy recoupments, and the net price of each drug on the formulary.

Providers must then report compensation for each six-month period, or each quarter at the plan's request, within 30 calendar days after the period ends. Amounts must be stated as monetary amounts. The provider must allow an audit of its disclosures not less than once per year at the plan's written request, using an auditor the responsible plan fiduciary selects.

Which Self-Insured Group Health Plans Are Covered

The rule defines "large" through two tests. A plan is covered if it is offered by a "specified large employer" that employed an average of at least 100 employees on business days during the preceding calendar year. A plan maintained by an employee organization or a joint board of trustees is covered if it had an average of at least 100 participants on business days during the preceding plan year.

Plans whose benefits are provided entirely through an insurance policy are excluded, and the regulatory disclosure rules for fully insured plans are reserved. The final rule also excludes plans sponsored by, or affiliated with, a drug manufacturer, distributor, wholesaler, pharmacy benefit manager or rebate aggregator.

Legal Framework Under ERISA Section 408(b)(2)

ERISA section 406(a)(1)(C) treats the furnishing of services between a plan and a party in interest as a prohibited transaction. Section 408(b)(2) exempts a service arrangement when the contract is reasonable, the services are necessary and no more than reasonable compensation is paid.

Previously, the Department's 2012 regulation required compensation disclosures to pension plans but reserved paragraph (c)(2) of 29 CFR 2550.408b-2 for welfare plans. Congress added section 408(b)(2)(B) in the Consolidated Appropriations Act, 2021, for brokers and consultants to group health plans, and the Consolidated Appropriations Act, 2026, enacted February 3, 2026, extended it to pharmacy benefit managers. Paragraph (c)(2) now cross-references the new section.

Fiduciary Relief, Enforcement Policy and Later Deadlines

The rule includes a class exemption for a responsible plan fiduciary that did not know of a provider's disclosure failure and reasonably believed the requirements were met. The fiduciary must request a correction in writing and, if the provider does not comply within 90 calendar days, notify the Department and decide whether to continue the arrangement.

EBSA also announced a temporary enforcement policy covering February 3, 2026, through the rule's applicability date. During that period, providers and fiduciaries acting under a good faith interpretation of their obligations under section 408(b)(2)(B) will not be treated as out of compliance.

Other statutory changes follow a later schedule. The Consolidated Appropriations Act, 2026, requires pharmacy benefit managers to pass through manufacturer rebates and other remuneration to plans, and a new ERISA section 726 adds retrospective reporting on drug spending, both effective for plan years beginning on or after August 3, 2028.