New mandates force PBMs to disclose business dealings
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The Trump administration is intensifying efforts to crack down on companies that manage drug benefits for most Americans.
Why it matters: Pharmacy benefit managers are again in the administration's crosshairs over allegations of opaque business practices and their ability to manipulate markets at the expense of patients.
- The latest move comes after Congress passed new transparency requirements and changed how the firms get compensated.
- But it's not clear whether it will significantly eat into PBMs' revenues.
Driving the news: The Department of Labor on Thursday finalized a rule requiring the PBMs to disclose semiannually what they earn for negotiating drug prices on behalf of employer health plans, or whenever they renew or extend an agreement.
- Companies including CVS Caremark, Express Scripts and Optum Rx will have to detail payments from drug manufacturers, instances of "spread pricing" when a health plan pays more for a drug than the amount reimbursed to the pharmacy, and situations where the total cost of the drug is less than a patient's copayment.
- Health plans can audit the PBMs at least once a year. And PBMs have to provide an explanation if they make 5% or more above what they estimated they would.
- The rule stems from President Trump's executive order on lowering drug prices and follows a series of Federal Trade Commission settlements with leading PBMs earlier this year over alleged anticompetitive practices.
What they're saying: "This is a win for every American worker who has ever paid too much at the pharmacy counter," said Labor Secretary Keith Sonderling. "For years, PBMs have operated in the shadows, pocketing hidden fees while workers and employers were left in the dark."
- Officials pointed to projections that employers and workers are shouldering some of the steepest health cost increases in decades. A KFF survey showed employees' share of family coverage is up 9% from 2025.
- But the Pharmaceutical Care Management Association, a trade group for PBMs, said the rule could lead to higher patient costs and less competition, by creating another transparency reporting system on top of the congressionally mandated changes.
- "It is a solution in search of a problem," said the group's CEO, David Marin.
Between the lines: The rule takes effect in July and applies to self-insured group plans with more than 100 participants that pay their own health claims. That effective date is a year before the PBM changes that Congress passed are due to take effect.
- Backers of the rule such as Transparency Rising, a trade group representing smaller PBMs, said the requirements have teeth because disclosure is tied to ERISA rules and health plan fiduciaries have to report PBMs that fail to provide the information.
- But the rule covers fewer plans than originally envisioned, and there are no direct restrictions on PBM pricing, compensation from spread pricing, or on retaining manufacturer rebates, Raymond James analyst Chris Meekins wrote in a note.
- "The key financial question remains whether greater employer visibility leads to lower retained PBM compensation or simply changes how that compensation is charged," Meekins wrote.
What we're watching: The rule still could be challenged in court.
- Some PBMs have already started restructuring their businesses as part of the FTC settlements and in anticipation of the mandated changes.
- Meanwhile, some employers are cutting ties with the biggest PBMs and striking deals with smaller rivals to manage their drug costs — and signals point to more companies considering a switch.
