PBM Transparency Rules and CAA 2026: Key Disclosure Requirements and What Employers Need to Know
As winter weather was in full swing around the country, so were the printing presses in Washington, D.C. In late January, the Employee Benefits Security Administration (EBSA), a division of the Department of Labor (DOL), released a proposed rule, “Improving Transparency into Pharmacy Benefit Manager Fee Disclosures,” which focused on methods of improving transparency around the fees and compensation that Pharmacy Benefit Managers (PBMs) receive. One week later, on February 3rd, the President signed the Consolidated Appropriations Act of 2026 (CAA 26) into law. This law puts the proverbial target on the backs of PBMs by requiring not only more transparency, but also new reporting on PBM rebates, price spreading, and compliance. The combination of these new regulatory developments has the potential to alter the role and work of PBMs and how they interact with employer-sponsored group health plans. Let’s explore how CAA 2026 and EBSA rules are reshaping pharmacy benefit manager practices.
Consolidated Appropriations Act of 2026
Following the enactment of the Consolidated Appropriations Act of 2026 (CAA 26) in early February, sweeping changes to Pharmacy Benefit Manager (PBM) practices are set to include:
- The 100% pass-through of rebates, fees, and discounts to the plan and/or issuer;
- PBMs must allow plans to audit the remitted rebates, including those paid by manufacturers and/or wholesalers;
- A new requirement prohibiting PBMs from entering into contracts that limit their ability to provide any required reporting;
- PBM reporting on a semi-annual basis to large employers (100 or more participants) and quarterly reports if requested by the group health plan
Many of these changes become effective in 2029 and apply to both fully insured and self-funded plans. They also come with stricter penalties for non-compliance:
- $10,000 per day if a plan, carrier, or PBM fails to provide the required reporting
- $100,000 if a plan, carrier, or PBM knowingly provides false information
This is a significant shift not just in transparency, but also in accountability. CAA 26 will likely result in employers receiving significantly more information, but it also materially strengthens the expectation that employers actively manage their PBM relationships as fiduciaries. Further guidance was promised within 18 months of enactment.
Beyond the changes targeting PBMs, what new compensation disclosure requirements does CAA 2026 impose on group health plan service providers?
In addition to the PBM-specific provisions, CAA 26 clarifies and expands existing compensation disclosure requirements for group health plan service providers. What was previously understood to apply primarily to brokers and consultants receiving $1,000 or more in compensation has now been clarified to apply more broadly across all group health plan service providers. These providers are required to disclose both direct and indirect compensation prior to entering into a contract or arrangement with a plan. Notably, this requirement is already in effect, making it an immediate compliance consideration for employers as they evaluate new and renewing vendor relationships.
The DOL’s Proposed Rule
The Department of Labor’s proposed PBM transparency rule was born out of President Trump’s Executive Order 14273, executed in hopes of lowering Rx costs and making the market more competitive. Should this proposed rule be finalized, it would require PBMs and related service providers to disclose direct and indirect compensation, service relationship details, and transaction-level pricing details (e.g., rebates, spread pricing, pharmacy clawbacks) prior to contracting and semi-annually thereafter. They would also be required to allow plans to audit the disclosed information.
It’s important to note that the proposed rule came before CAA 26 and the two don’t fully line up. Notably, the proposed rule is only applicable to self-funded group health plans, while CAA 26 applies to fully insured and self-funded group health plans. That leaves some open questions: Will the rule be updated to reflect what’s now required under CAA 26? Or could parts of it move forward sooner, ahead of the broader changes expected to be outlined in regulations later in 2027? For now, that remains to be seen.
Postscript: Express Scripts Settlement and TrumpRx
And if all of this is not enough, PBMs remained in the news cycle with the announcement that the Federal Trade Commission (FTC) secured a settlement with Express Scripts over its business practices. The PBM is alleged to have inflated insulin costs by pushing drug manufacturers to compete for formulary placement based on the size of rebates calculated according to the list price rather than net price. Express Scripts was then retaining a portion of the inflated rebate.
As part of the settlement, Express Scripts agreed to modify its business practices by, among a variety of practice improvements,:
- Ensuring member out-of-pocket costs are based on the net price rather than the inflated list price;
- Separating compensation from the list price of a drug;
- Increasing transparency for plan sponsors, including reporting on the cost of each drug; and
- Ensuring that members receive the benefit of prices available through the TrumpRx website as well as counting member payments made on TrumpRx toward deductibles and out-of-pocket maximums (though please note that regulatory changes would be required to achieve this).
Speaking of TrumpRx, the portal made its debut in February. The TrumpRx drug pricing portal is a government-run portal (TrumpRx.gov) that provides coupons for certain drugs and directs consumers to the manufacturer’s website to purchase medications at discounted prices for others. The website does not sell drugs; it merely functions as a conduit.
Here are some key facts to keep in mind:
- Discounts apply to out‑of‑pocket purchases only;
- Insurance, Medicare, and Medicaid cannot be used with TrumpRx prices; and
- So far, 43 different medications are included, ranging from Ozempic, Wegovy, and others used for chronic conditions, fertility, and respiratory issues.
“Collectively, the FTC’s enforcement action and the launch of TrumpRx highlight a growing federal emphasis on regulating PBM practices, improving drug pricing transparency, and increasing access to affordable prescription medications.
Summary
So, what do the new PBM transparency rules and CAA 2026 mean for employers?
Only time will tell when it comes to the DOL’s proposed rule, but the CAA 26 creates opportunities for employers now and in the years ahead to fulfill their fiduciary duties. Employers should begin preparing by taking a more active role in managing their service provider relationships, especially PBMs. We encourage employers to review their current relationship with their PBM, focusing on compensation and fee structures. Employers should also take advantage of the audit provisions and consider conducting annual audits of their PBMs. The Express Scripts settlement and TrumpRx may not have ubiquitous impacts on employers, but they are signs that the prescription drug landscape is changing. We will continue to keep an eye on this evolving area of benefits compliance and share updates as they become available.
