DOL Mandates PBMs Disclose Fees to Self-Insured Health Plans by 2027
DOL finalizes rule requiring PBMs to disclose fees to fiduciaries of large self-insured health plans.
Why it matters: Legal counsel must guide employers and benefits providers on PBM fee disclosure to manage compliance and fiduciary risk. The rule affects contract terms and plan governance for large employers.
- Rule applies to self-insured group health plans with over 100 participants and takes effect July 2027.
- PBMs must provide written fee disclosures before contract signing, renewal, or extension.
- PBMs must submit ongoing compensation disclosures within 30 days after each six-month period under the contract.
- DOL projects $22 billion in prescription drug cost savings over 10 years from increased transparency.
On October 29, 2026, the U.S. Department of Labor (DOL) finalized a rule increasing transparency requirements for pharmacy benefit managers (PBMs) serving large self-insured group health plans. The rule requires PBMs and affiliated brokers or consultants to disclose fees and compensation to plan fiduciaries—those responsible for managing and overseeing plan assets and decisions.
Under the rule, PBMs must deliver initial written disclosures of services, direct and indirect compensation, and financial relationships well before entering into, renewing, or extending contracts. Additionally, PBMs must provide compensation updates within 30 days after each six-month period during the contract term. These measures aim to empower fiduciaries with detailed insight into fees and conflicts of interest.
This rule affects self-insured plans covering more than 100 participants where the plan directly pays claims. It becomes effective in July 2027. The DOL projects the increased transparency could generate up to $22 billion in prescription drug cost savings over the next decade by reducing waste and inefficiencies.
Government officials praised the measure: DOL Secretary Keith Sonderling described it as "a win for every American worker who has ever paid too much at the pharmacy counter." CMS Administrator Dr. Mehmet Oz stated, "more transparency means more competition, and more competition means lower health care costs." Daniel Aronowitz, Assistant Secretary for Employee Benefits Security Administration, noted that increased visibility supports employers in "negotiating harder, cutting waste, and passing real savings on to workers."
Legal experts note this rule imposes significant new obligations on fiduciaries and legal counsels advising health plans. Understanding timing and content requirements for PBM disclosures is essential to avoid regulatory violations and manage fiduciary risk—i.e., the legal duty to act prudently in plan management. This marks an important regulatory step to enhance oversight of PBMs, an industry long scrutinized for opaque financial practices driving up drug prices.
John Stevens, a benefits law analyst at ClearBridge Consulting, comments, "The rule offers much-needed clarity on PBM transparency, but fiduciaries will need support navigating these disclosures to ensure compliance and leverage savings opportunities." Legal teams should prepare for contractual revisions and heightened monitoring obligations in coming months.
By the numbers:
- 100 participants — minimum size for self-insured plans affected by the rule
- July 2027 — effective date of the DOL PBM disclosure rule
- $22 billion — projected savings on prescription drug costs over 10 years
Yes, but: While government officials highlight the rule’s expected benefits, some industry observers caution that implementation challenges and interpretation will affect actual savings. Compliance burdens may also increase legal complexity for fiduciaries.
What's next: Employers and health plan fiduciaries should start reviewing existing PBM contracts and develop processes for fee disclosures ahead of the July 2027 compliance deadline. Legal counsel will play a key role in this transition.