New federal rule requires drug intermediaries to disclose how they’re paid

The companies that manage billions of dollars in prescription drug spending for employers and workers will soon be required to inform their clients all the different ways they get paid under a new rule released by the Trump administration Thursday.

A final rule by the Department of Labor will require pharmacy benefit managers (PBMs) for the first time to disclose detailed information about all their fees and compensation from drug manufacturers, pharmacies, consultants and more — which could help shed light on potential conflicts of interest.

PBM compensation has long been shrouded in secrecy and confidential agreements. The Labor Department said the new transparency could help employers negotiate contracts and seek lower prescription drug costs.

“This is a win for every American worker who has ever paid too much at the pharmacy counter,” Secretary of Labor Keith Sonderling said in a statement. “For years, PBMs have operated in the shadows, pocketing hidden fees while workers and employers were left in the dark. Today, President Trump is delivering the transparency Americans deserve – and putting American workers first.”

High prescription drug costs are a major concern to voters this election cycle, and the Trump administration has been promoting price transparency to reduce costs, though with minimal practical impact .

The final PBM rule is projected to save health plans and enrollees more than $800 million annually because of reduced prescription prices, the Department of Health and Human Services said. At most, the rule could save up to $22 billion over 10 years.

Still, transparency advocates and employer groups applauded.

“Large employers pay for their workers’ prescriptions, but many can’t see how much of that money their PBM and any affiliated entity keeps,” James Gelfand, president and CEO of the ERISA Industry Committee, said in a statement. “This rule changes that. Employers will be able to check the numbers, ask hard questions, and hold their vendors accountable to the contract.”

Pharmacy benefit managers are the intermediaries in the prescription drug supply chain that negotiate discounts with drug companies, paying pharmacies and determining which drugs patients can access and how much they cost.

They are often owned by and integrated into large insurance companies. The three biggest PBMs are UnitedHealth Group’s Optum Rx, CVS Health’s Caremark and Cigna’s Express Scripts, which represent about 80 percent of all U.S. prescriptions.

The rule will apply to self-insured employers, typically larger businesses that pay their own health claims. Implementation will begin on July 1, 2027. The rule enacts severe financial penalties and potential invalidation of the PBM contract if the companies don’t cooperate.

The PBM industry faced intense scrutiny on Capitol Hill last year; essentially every committee in both chambers with jurisdiction over healthcare drafted PBM reform legislation, and Trump also frequently railed against them.

Congress passed a law earlier this year to require PBMs to disclose more information. Officials said the law guided the drafting of the rule, with parts of the law to take effect after the rule does.

Critics say PBMs profit by steering people to more expensive drugs, driving up overall healthcare spending.

The rule was initially proposed in January and faced significant opposition from PBMs, health insurers and even some pharmaceutical companies.

David Marin, president and CEO of the PBM industry group Pharmaceutical Care Management Association, said the Department of Labor rule is “redundant” because Congress already enacted PBM transparency reform and called it “regulatory overreach” beyond the intent of Congress.

“[W]e are extremely concerned that it will lead to higher patient costs and less competition, the opposite of the Department’s stated intent,” Marin said in a statement. “Patients, employers, and unions will have no new meaningful transparency from this action, but prescription drug benefits will now be more expensive.”