The U.S. Department of Labor has issued new rules requiring pharmacy benefit managers to disclose information to corporate employers, one of the measures aimed at advancing reform in the industry.
The Trump administration will require companies that manage hundreds of billions of dollars in drug spending to publicly disclose how they earn their fees. According to people familiar with the matter, the Labor Department is set to formally release the new rules on Thursday: pharmacy benefit managers must provide detailed data to their corporate employer clients, including the actual prices the organizations pay when purchasing drugs, as well as various payments received from pharmaceutical manufacturers.
A Labor Department official said the new rules are intended to curb soaring medical costs. The measure echoes an executive order from April 2025 and fulfills the Trump administration's commitment to carrying out major reforms of pharmacy benefit managers. This is one part of the accelerating process of industry reform.
For a long time, regulators and members of Congress have criticized pharmacy benefit managers for lacking transparency in their operations, arguing that they may profit by steering patients toward more expensive drugs, thereby driving up overall medical spending. Drug spending is a major driver of record-high corporate medical costs, including cancer treatments and popular GLP-1 class diabetes and weight-loss drugs.
A survey conducted by Willis Towers Watson Public Limited Company (WTW) this year showed that only 18% of employers are satisfied enough with their pharmacy benefit manager partners to recommend them to other companies. Jenny Goins, interim chief executive of the National Health Care Purchasing Coalition, said of the draft rule: "This is hugely important for employers. Ultimately, employers need to see the full details of what they are paying for."
Pharmacy benefit managers say they lower drug costs by negotiating better prices with pharmaceutical manufacturers. Leading companies in the industry, including Express Scripts and CVS's Caremark, have already launched new models that they claim can achieve greater business transparency. Under pressure from the Federal Trade Commission as well as states and Congress, major pharmacy benefit managers have already made some adjustments.
People familiar with the matter said the new rules will formally take effect in July and will apply to self-insured employers — those that bear employee medical claims themselves rather than purchasing traditional commercial insurance. Most large companies use the self-insured model. An early draft published by the Labor Department in January this year was opposed by large pharmacy benefit managers. These organizations argued that the draft should be withdrawn on the grounds that it overlaps with another law passed by Congress in February this year. That law also contains transparency provisions and requires pharmacy benefit managers to disclose compensation received from pharmaceutical manufacturers, among other reforms.
However, most of the provisions targeting pharmacy benefit managers in that law will not take effect until 2028, so the Labor Department's new rules will be implemented first. Transparency Rising, an industry organization representing small and medium-sized pharmacy benefit managers, expressed support for the Labor Department's draft rules. According to people familiar with the matter, under the new rules: pharmacy benefit managers must inform employers in advance of the compensation they expect to receive from pharmaceutical manufacturers and pharmacies, and update actual income every six months; employers will also gain the right to audit their pharmacy benefit manager partners.
In addition to rebates, the organizations must also disclose rebates and other various payments made by pharmaceutical manufacturers, including all relevant income that could induce the organizations to prioritize recommending specific drugs. The disclosure obligations also cover group purchasing organizations affiliated with pharmacy benefit managers, which collect rebates on their behalf. Pharmacy benefit managers will also need to disclose to employers the "spread pricing" model: under this model, the amount an employer pays for a certain drug is higher than the reimbursement amount received after the pharmacy sells that drug, and the difference in profit belongs to the pharmacy benefit manager.
Just as the new federal rules seek to clarify some of the revenue sources of pharmacy benefit managers, these organizations are also opening up new revenue channels. The specialty pharmacy businesses under large pharmacy benefit managers are growing. Specialty pharmacies are responsible for dispensing high-priced drugs, serving patients with complex conditions and earning compensation from doing so. Some pharmacy benefit managers have also begun launching their own white-label biosimilars, which are generic versions of biologic drugs.
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