On January 29, 2026, the Department of Labor (DOL) released a proposed regulation titled Improving Transparency into Pharmacy Benefit Manager Fee Disclosure, which would require providers of pharmacy benefit management services, and the affiliates of such providers providing advice, recommendations, or referrals for the provision of such services, to disclose information about their direct and indirect compensation to fiduciaries of self-insured group health plans subject to the Employee Retirement Income Security Act (ERISA). The proposed rule implements section 12 of Executive Order (E.O.) 14273, Lowering Drug Prices by Once Again Putting Americans First, which instructs the DOL to propose regulations to improve employer health plan transparency into the compensation received by pharmacy benefit managers (PBMs). The proposed regulation is intended to provide transparency into contracts and arrangements with PBMs and affiliated brokers and consultants so that responsible ERISA plan fiduciaries can better fulfill their statutorily mandated role to determine that the service contracts or arrangements are reasonable. Here's what you need to know:

• This is only a proposed rule and must undergo notice and comment rulemaking before becoming final and binding.
• The rule is limited to ERISA self-funded group health plans. The DOL requests comment on whether the proposal rule should be expanded to cover more than self-funded plans.
• The required advance, written disclosures would be necessary for parties to contracts or arrangements for PBM services to obtain the benefit of a prohibited transaction exemption under ERISA 408(b)(2). According to the proposal, "[n]o contract or arrangement for services between a covered plan and a covered service provider, nor any extension or renewal, is reasonable within the meaning of section 408(b)(2) of [ERISA] unless, in addition to meeting the general requirements in § 2550.408b-2, the disclosure requirements of this section are satisfied."
• The proposal contains an exemption from liability under ERISA section 406(a)(1)(C) and (D) for a "responsible plan fiduciary" that did not know of a covered service provider's failure to make the required disclosures, if certain conditions delineated in the proposal are met.
• "Pharmacy benefit management services" is broadly defined as services necessary for the management or administration of a self-insured group health plan's prescription drug benefits (including the self-insured group health plan's provision of prescription drugs through the plan's medical benefits), regardless of whether the person, business, or entity performing the service identifies itself as a PBM. The DOL seeks comment on this definition.
• "Covered service providers" are service providers that enter a contract or arrangement with an ERISA self-insured group health plan to provide pharmacy benefit management services, regardless of whether the services will be performed by the covered service provider, an affiliate, an agent, or a subcontractor.
• If a third-party administrator (TPA) contracts with an ERISA self-insured group health plan to provide pharmacy benefit management services, the TPA is a covered service provider under this proposal, even if it intends to rely on another provider to perform those services (e.g., a subcontracted PBM). In those circumstances, the TPA must be able to obtain information from the provider performing the PBM services necessary for those disclosures. 
• "Compensation" is defined as "anything of monetary value" (valued in excess of $250) and must be disclosed if it is reasonably expected to be received by the covered service provider or by an affiliate, agent, or subcontractor of the covered service provider during the term of the service contract or arrangement. Manufacturer payments, spread compensation, copay claw-backs from pharmacies, and compensation expected upon contract termination are included. The rule allows plan fiduciaries to request compensation data, which must be provided in the aggregate and for each covered drug, in a machine-readable format.
• In addition to the disclosures made in advance of entering a contract or arrangement for pharmacy benefit management services, the rule also requires semi-annual disclosures of compensation actually received by the covered service provider, an affiliate, an agent, or subcontractor in connection with the service contract or arrangement.
• In addition to fee and compensation disclosures, a covered service provider must disclose price protection agreements and formulary placement incentives with drug manufacturers, as well drug pricing methodologies used to determine plan costs.
• If a consortium or other group assists in negotiating with the provider of pharmacy benefit management services but the self-insured group health plan contracts directly with the provider, the provider of pharmacy benefit management services is the covered service provider. However, if the consortium or other employer group were to contract to provide the services to the self-insured group health plan, the consortium or other group is the covered service provider.
• The regulation requires a statement as to whether a covered service provider, an affiliate, an agent, or a subcontractor will provide, or reasonably expects to provide, services pursuant to a service contract or arrangement "directly" to the covered plan as a fiduciary.
• The regulation gives annual audit rights to plan fiduciaries of ERISA self-funded group health plans to enable them to verify the accuracy of the disclosures.
• Upon the written request of a responsible plan fiduciary, a covered service provider is required to furnish any other information relating to the contract or arrangement that is required for the covered plan to comply with ERISA reporting and disclosure requirements and regulations.
• The rule as proposed stops short of mandating direct and indirect fee and compensation disclosures for other health and welfare plan service provider contracts and arrangements beyond PBMs and associated consultants and brokers. The DOL seeks comment on whether (and to what extent ) it could or should expand the disclosures in the proposal, potentially add additional disclosure obligations, or cover additional service providers, (and which service providers should be covered, if so).
• The proposed rule is intended to apply to plan years beginning on or after July 1, 2026.
• Comments to the proposed rule are due on March 31, 2026.

If you have questions about the proposed rule or its impact or would like assistance in preparing comments on the proposal to send to DOL, please contact Miller & Chevalier Member and ERISA Practice Lead Joanne Roskey.

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