PBM Transparency Proposal: Labor Department Mandates
- Pharmacy benefit managers (PBMs) will be required to disclose detailed financial data about their revenue streams, including rebates and fees from drug manufacturers, under a final rule issued...
- The final rule mandates PBMs to report data on their financial relationships with drug manufacturers, health plans, and pharmacies.This includes disclosing all direct and indirect compensation, including rebates,...
- The CMS final rule, published in the Federal Register, details these requirements extensively.
Pharmacy Benefit Managers Face New Disclosure Rules
Table of Contents
Pharmacy benefit managers (PBMs) will be required to disclose detailed financial data about their revenue streams, including rebates and fees from drug manufacturers, under a final rule issued by the Centers for Medicare & medicaid Services (CMS) on January 26, 2026. This aims to increase transparency in the prescription drug supply chain and lower costs for consumers.
What are the New Requirements?
The final rule mandates PBMs to report data on their financial relationships with drug manufacturers, health plans, and pharmacies.This includes disclosing all direct and indirect compensation, including rebates, price concessions, and administrative fees. The goal is to shed light on how PBMs profit from the drug pricing process and identify potential conflicts of interest.
Specifically, PBMs must submit annual reports to CMS detailing:
- All financial arrangements with drug manufacturers.
- The total amount of rebates and price concessions received.
- How those rebates and concessions are shared with health plans and employers.
- Administrative fees and other compensation received from health plans.
The CMS final rule, published in the Federal Register, details these requirements extensively.
Why is This happening?
Concerns about PBM practices have been growing for years, with critics arguing that a lack of transparency allows PBMs to inflate drug prices and keep rebates for themselves, rather than passing savings on to consumers. The rule is a direct response to these concerns and builds on provisions in the Inflation Reduction Act.
The Inflation Reduction Act of 2022 directed the Department of Health and Human services (HHS) to require PBMs to report certain data. This new rule expands on those initial requirements, providing a more comprehensive picture of PBM finances. The CMS press release from January 26, 2026, highlights the connection to the Inflation Reduction Act.
What is the Expected Impact?
CMS anticipates that increased transparency will empower health plans and employers to negotiate better drug prices with PBMs and drug manufacturers. It also aims to provide policymakers with the data needed to assess the effectiveness of PBMs and identify potential reforms. The agency estimates that the rule will result in $19 billion in savings over ten years.
Such as, a health plan, armed with data on the rebates a PBM receives from a drug manufacturer, can demand a larger share of those rebates be passed on to its members. The HHS fact sheet released alongside the rule details potential savings scenarios.
What is the Timeline for Implementation?
PBMs are required to submit their first reports to CMS by June 1, 2027. CMS will begin publishing aggregated data from these reports on its website in 2028. The agency is also developing additional rules to further regulate PBM practices, with proposed rules expected in late 2026.
the CMS PBM Data Submission page provides a detailed timeline and resources for PBMs preparing to comply with the new rule.