PBMs Must Now Disclose Rebates and Spread Fees, and 85% of Large-Firm Workers Are in Self-Funded Plans

For most large employers, the pharmacy benefit is one of the biggest lines in the health budget and one of the least visible. The plan pays the claim, the pharmacy fills the prescription, and the pharmacy benefit manager sits in the middle, collecting manufacturer rebates and pricing spreads the employer has rarely been able to see in full. That changes with a rule the Labor Department finalized last week. PBMs serving large self-insured plans will have to put their compensation in writing before every renewal and report what they actually earned twice a year. The catch for HR is that the rule does not make anyone read those reports. It makes the employer responsible for having read them.

What the Rule Requires, and From Whom

According to HR Dive's report on the final rule, PBMs must share fee and compensation data from payments they receive from drugmakers, pharmacies and other supply chain entities, including rebates negotiated with manufacturers and spread payments, the difference between what a plan pays for a drug and what the PBM reimburses the pharmacy. The Labor Department estimates the rule will save employers and workers $22 billion over a decade. Secretary of Labor Keith Sonderling said PBMs have operated “in the shadows” while “workers and employers were left in the dark.”

The rule reaches large self-insured group health plans, generally those with 100 or more participants or sponsored by employers with at least 100 employees, PLANADVISER reported. Fully insured plans are outside its additional requirements. Covered providers must give initial written disclosures before a contract is signed, or no more than 90 days before an extension or renewal, then report compensation actually received within 30 days after each six-month period, or quarterly if the plan asks. Plans gain the right to audit those disclosures with an auditor of their own choosing. Daniel Aronowitz, head of the Employee Benefits Security Administration, noted that healthcare is the second-largest operating expense for most employers, who “may not see how much of that spending their PBMs keep.”

The timeline is shorter than it looks. An analysis by Sheppard Mullin in the National Law Review notes that the rule applies to plan years beginning on or after July 1, 2027, which generally means January 1, 2028 for calendar-year plans. Working back 90 days from a January renewal puts the first initial disclosures in early October 2027. Ongoing reports must explain aggregate overages against the initial estimates, generally at a threshold of at least 5% or a lower agreed figure, and providers must acknowledge an audit request within 10 business days and generally hand over the information within 60 calendar days.

Why This Lands on HR Desks

The scope is wider than the phrase “large plans” suggests. KFF's 2026 Employer Health Benefits Survey found that 71% of covered workers are in self-funded plans, including 85% of covered workers at larger firms and 25% at smaller ones. Average annual premiums reached $9,804 for single coverage and $28,303 for family coverage, both up 5% from 2025. For the majority of employees at large organizations, the plan their employer sponsors is exactly the kind this rule covers.

The rule is built around ERISA's fiduciary framework, which is what turns a vendor obligation into an employer one. PLANADVISER explains that the rule creates an “innocent fiduciary” exemption for plan fiduciaries when a PBM fails to meet its disclosure duties. To rely on it, the fiduciary must notify the Labor Department, seek correction from the provider, and decide whether to continue or end the arrangement, documenting the basis for that decision. In practice, the benefits team that never asked for the report, or asked and filed it unread, has no record to point to.

Not everyone expects the disclosures to change prices. HR Dive quoted David Marin, president and CEO of the Pharmaceutical Care Management Association, calling the rule “a solution in search of a problem.” James Gelfand, president and CEO of the ERISA Industry Committee, took the opposite view, saying employers “will be able to check the numbers, ask hard questions, and hold their vendors accountable.” The rule does not require a PBM to lower a single fee. Whatever savings arrive will come from employers who use the information at the negotiating table.

The Pay Budget Is Already Paying for Drugs

That negotiation matters well beyond the benefits line. In a National Alliance of Healthcare Purchaser Coalitions survey of 408 employers, 83% said healthcare cost increases trade off with wage and salary increases, and 92% said healthcare costs hurt their competitiveness. High drug prices topped the list of affordability threats at 77%, ahead of high-cost claims at 75% and hospital prices at 68%. “Healthcare affordability is no longer just a benefits issue; it is a business issue, a workforce issue and a wage issue,” said Shawn Gremminger, the alliance's president and CEO.

Put those findings next to the new rule and the logic is direct. Every dollar of rebate or spread that a PBM keeps, and that an employer could have recovered, is a dollar that competes with next year's merit budget. The disclosures give compensation and benefits leaders the first standardized view of that money. Read alongside claims data, they show whether rising drug spend reflects what employees actually use or what the middleman earns.

A Playbook Before the First Disclosure

• Confirm whether your plan is covered. Check funding status and participant count with your broker, since the rule targets self-insured plans with 100 or more participants or sponsored by employers with at least 100 employees.
• Put the renewal date on the calendar now. Count back 90 days from your first plan year starting on or after July 1, 2027, and plan for the initial disclosure to arrive then, with time left to review it before you sign.
• Assign a named reviewer. Decide who reads each initial disclosure and semiannual report, who signs off, and where the review is recorded, so a fiduciary decision can be shown rather than assumed.
• Write the audit right into the contract. Confirm your PBM agreement allows an annual audit with an auditor you select, and budget for using it at least once in the first cycle.
• Set a variance trigger. Agree on a threshold below the default 5% at which the PBM must explain compensation overages, and decide in advance what response a large overage triggers.
• Connect the pharmacy line to the pay budget. Share the disclosures with compensation planners, so recovered rebates or renegotiated fees can be weighed directly against salary increase budgets.

The PBM rule is a transparency rule, not a price control. It hands large self-funded employers a set of numbers they have asked for for years and leaves what happens next up to them. The employers that see savings will be the ones who treat the first disclosure as the opening of a negotiation, and who can show a regulator, and their own employees, that someone actually read it.