- On February 3, 2026
Federal attention on the pharmaceutical benefit manager (PBM) sector has increased markedly in recent weeks. On January 22, 2026, the U.S. House of Representatives approved the Consolidated Appropriations Act (CAA) for fiscal year 2026. This wide-ranging funding legislation includes multiple healthcare provisions, among them sweeping reforms aimed at PBM operations. The Senate passed the bill on January 30, 2026, adopting amendments to certain sections, and the measure is now set to return to the House for further consideration.
In parallel, the U.S. Department of Labor (DOL) unveiled a proposed rule on January 28, 2026, that would impose new disclosure requirements on PBMs related to their fees and compensation. Together, these developments highlight the federal government’s expanding regulatory focus on PBM practices.
Overview of the PBM Industry
PBMs act as intermediaries that administer prescription drug benefits for most group health plans and insurers. Their responsibilities typically include processing pharmacy claims, establishing pharmacy networks, and negotiating rebates and discounts with drug manufacturers. Over time, PBMs have come under increased examination from policymakers and other stakeholders, driven by concerns over limited transparency and business practices such as spread pricing and retaining portions of manufacturer rebates. In the absence of comprehensive federal standards, many states have enacted their own PBM regulatory regimes.
Key PBM Provisions in the CAA
The CAA seeks to respond to these concerns through extensive reforms affecting PBMs, health plan sponsors, and insurers. Major elements include the following:
Expanded PBM Reporting Obligations
Under the bill, PBMs would be required to provide detailed information on prescription drug expenditures to group health plans and health insurance issuers at least twice annually, or quarterly if requested. PBMs must also prepare summary reports that plans can distribute to participants and beneficiaries upon request.
Participant Notice Requirements for Group Health Plans
Group health plans would be required to notify participants and beneficiaries each year, in writing, that their PBM is obligated to submit prescription drug spending reports. This disclosure may be included within existing plan materials or provided as a standalone notice.
Upon request, plans must also supply:
- The PBM’s prescription drug spending summary; and
- For large group health plans, data showing the difference between the amount the plan paid the PBM and the amount the PBM reimbursed the pharmacy for a drug associated with the requesting individual’s claim.
Civil Penalties for Noncompliance
PBMs and group health plans that fail to provide required information may be subject to civil monetary penalties of up to $10,000 per day for each day of noncompliance. Additional penalties may apply in cases involving inaccurate or misleading disclosures. Regulators may waive penalties where entities demonstrate good-faith compliance efforts.
Mandatory Rebate Pass-Through
To satisfy ERISA’s standards for reasonable compensation, PBMs would be required to remit 100% of all rebates, administrative fees, alternative discounts, and other forms of remuneration to group health plans and insurers. These amounts must generally be paid on a quarterly basis, fully itemized, and disclosed to the plan or issuer. If an audit reveals that a plan received excess amounts, the overpayment must be returned to the PBM.
If a PBM fails to transfer required rebates, plan fiduciaries will not be deemed to have violated ERISA, provided certain statutory conditions are met.
The legislation also expressly expands ERISA’s definition of “covered service providers” to include PBMs, along with other entities providing services to health plans. Covered service providers must disclose detailed information regarding their services and all anticipated direct and indirect compensation so that plan fiduciaries can assess the reasonableness of contractual arrangements.
Medicare Part D Changes
The CAA also introduces several reforms specific to Medicare Part D, including:
- Barring PBM compensation arrangements that are linked to a drug’s manufacturer list price;
- Directing the Centers for Medicare & Medicaid Services (CMS) to define and enforce “reasonable and relevant” contract terms for Medicare Part D, including standards related to reimbursement and dispensing fees, with authority to impose financial penalties; and
- Allowing CMS to monitor pharmacy payment patterns and PBM network participation, including identifying “essential retail pharmacies.”
DOL Proposed Rule on PBM Disclosures
Echoing many of the CAA’s transparency goals, the DOL’s proposed regulation would significantly broaden PBM disclosure obligations under ERISA’s compensation disclosure framework. The proposal implements an April 2025 Executive Order focused on improving transparency around PBM compensation in employer-sponsored health plans.
Under the proposal, PBMs serving ERISA-covered, self-funded group health plans would be required to disclose compensation information to plan fiduciaries so they can evaluate whether PBM fees are reasonable in light of their fiduciary responsibilities. Required disclosures would include:
- Rebates and other payments received from drug manufacturers;
- Compensation earned when the amount charged to the plan exceeds the reimbursement paid to the pharmacy; and
- Payments recovered from pharmacies related to prescription drugs dispensed to the plan.
The proposal would also permit plan fiduciaries to audit PBM disclosures and would provide additional protections for fiduciaries if a PBM fails to comply with its obligations.
Although fully insured group health plans are excluded from the current proposal, the DOL indicated that disclosure requirements for those plans may be addressed in future rulemaking and specifically invited public comment on the issue. Comments on the proposed rule must be submitted by March 31, 2026.