The Biggest PBM Transparency Rule in Decades? What Employers Need to Know Now

On Episode #2 of The EOB Podcast, we broke down what could become one of the most significant PBM transparency developments in decades: a proposed U.S. Department of Labor rule targeting hidden compensation, rebates, spread pricing, pharmacy clawbacks, and PBM disclosure practices.

And honestly, this conversation is long overdue.

For years, employers, advisers, and even many industry professionals have struggled to access clear, actionable information about how Pharmacy Benefit Managers actually make money and how those financial arrangements impact employer-sponsored health plans.

The proposed rule shines a massive spotlight on that issue.

But one of the most important points we made throughout the episode is this:

PBMs are already supposed to be disclosing much of this information under existing law.

That’s what makes this conversation so important.

This isn’t just about a potential future regulation. It’s about whether employers are actually exercising the fiduciary oversight they already should be exercising today.

PBMs Already Have Disclosure Obligations

One of the biggest misconceptions we continue seeing in the market is the assumption that PBM transparency rules do not already exist.

That is simply not true.

As we discussed during the episode, the Consolidated Appropriations Act (CAA) of 2021 and ERISA Section 408(b)(2) already require covered service providers — including PBMs — to disclose direct and indirect compensation arrangements tied to employer health plans.

The problem is that enforcement, clarity, and practical implementation have lagged behind.

In theory, employers should already have access to:

• Compensation structures
• Rebate arrangements
• Claims data
• RXDC reporting information
• Spread pricing methodologies
• Pharmacy reimbursement structures

In reality, many employers still struggle to get even basic information from PBMs and carriers.

And that disconnect is one of the biggest reasons this proposed rule matters so much.

Why Employers Still Struggle to Access Their Own Data

One of the biggest frustrations we discussed during the episode is how difficult it can still be for employers to access their own plan data.

Even with existing gag clause protections and RXDC reporting requirements, many plan sponsors continue running into resistance when requesting:

• Claims data
• Rebate information
• Pricing methodologies
• Manufacturer payment details
• Pharmacy reimbursement structures

We shared a real-world example from our own experience where simply requesting RXDC reporting data created significant pushback and internal escalation from a carrier.

And honestly, that should concern every employer.

If a plan sponsor cannot easily access information tied to their own health plan, how can they properly fulfill fiduciary obligations?

That question sits at the center of this entire conversation.

Why This Proposed PBM Rule Matters

The proposed Department of Labor rule matters because it gets significantly more detailed than existing disclosure requirements.

Instead of broad disclosure concepts, this proposal drills into specific areas like:

• Manufacturer rebates
• Spread pricing
• Pharmacy clawbacks
• Administrative fees
• Service fees
• Affiliate relationships
• GPO arrangements
• Audit rights
• Verification standards

In other words, it moves from general transparency expectations to highly specific disclosure categories.

That level of detail matters because many of the most significant compensation arrangements in healthcare have historically existed in places employers rarely see.

And when compensation structures remain hidden, fiduciary risk increases dramatically.

Spread Pricing Is Still a Massive Issue

One of the biggest topics we discussed throughout the episode was spread pricing.

For employers unfamiliar with the concept, spread pricing happens when:

• The employer pays one price for a prescription
• The pharmacy receives a lower reimbursement
• The PBM retains the difference

That “spread” can become a major revenue source.

The proposed rule would require PBMs to disclose:

• Whether spread pricing exists
• How it is calculated
• How reimbursement methodologies work
• Reconciliation and true-up practices
• Whether retained amounts stay with the PBM or return to the plan

And frankly, this is exactly the kind of transparency employers should already be demanding in RFPs today.

Because without visibility into pricing methodologies, employers cannot fully evaluate whether their plan is operating in employees’ best interests.

Pharmacy Clawbacks and Independent Pharmacy Pressure

Another major area we covered involved pharmacy clawbacks.

These arrangements can occur when:

• A participant pays a copay
• The pharmacy receives reimbursement
• The PBM later recaptures additional funds from the pharmacy

We discussed how these practices have placed enormous pressure on independent pharmacies across the country.

And beyond the impact on pharmacies themselves, these arrangements raise larger questions around:

• Fiduciary oversight
• Pricing fairness
• Participant costs
• Transparency
• Contract accountability

One of the strongest themes throughout the episode was that employers cannot properly govern what they cannot fully see.

That’s why disclosure and audit rights matter so much.

Rebate Retention Clauses Could Cost Employers Millions

One of the most practical discussions during the episode focused on rebate retention clauses buried deep inside PBM agreements.

These clauses often state that if a contract terminates before rebates are paid out, the PBM keeps the money.

That can represent:

• Hundreds of thousands of dollars
• Sometimes millions of dollars
• Money ultimately tied to employer and employee plan spending

And many employers do not even realize these clauses exist.

This is one of the clearest examples of why employers cannot simply rely on assumptions or standard renewals anymore.

Contract language matters.
Audit rights matter.
Disclosure matters.

And fiduciary oversight requires organizations to understand these arrangements before problems arise.

PBM Reform Does Not Require Waiting for a New Law

One of the biggest points we emphasized throughout the episode is that employers do not need to wait for this proposed rule to become final before taking action.

That’s a critical distinction.

Unlike some areas of healthcare where options remain extremely limited, the PBM market actually includes:

• Transparent PBMs
• Pass-through models
• Alternative pharmacy solutions
• Direct-to-consumer options
• Competitive contract structures

There are organizations already operating with significantly higher transparency standards.

Which means employers can begin improving fiduciary oversight immediately by:

• Updating RFP requirements
• Requesting detailed disclosures
• Demanding audit rights
• Evaluating spread pricing structures
• Reviewing rebate arrangements
• Comparing alternative PBM models

This is not a hypothetical future issue.

This is something employers can act on right now.

Audit Rights Are One of the Most Important Pieces

One of the strongest aspects of the proposed rule involves audit rights and verification standards.

Because at the end of the day, transparency without verification is not enough.

Employers should be asking:

• What audit rights exist?
• What data can be reviewed?
• Are there audit limitations?
• Who selects the auditor?
• How often can audits occur?
• What information is excluded?
• Are affiliates and subcontractors included?

The proposed rule pushes heavily toward the idea that disclosures must be verifiable, not simply accepted at face value.

That shift could become one of the most important long-term changes in employer health plan governance.

Employers Cannot Delegate Fiduciary Responsibility

Just like we discussed in Episode #1, fiduciary responsibility ultimately stays with the employer.

That remains true here as well.

Even if a PBM, broker, consultant, or carrier creates the problem, employers still carry responsibility for:

• Oversight
• Monitoring
• Vendor evaluation
• Fiduciary governance
• Contract review
• Process documentation

And importantly, prudence is not about perfection.

It is about demonstrating process, intentionality, and oversight.

That’s why we continue encouraging employers to:

• Invest in education
• Ask harder questions
• Improve transparency standards
• Build stronger governance procedures
• Document decision-making
• Work with partners willing to operate transparently

Final Thoughts: You Don’t Need the Rule to Start Acting Like a Fiduciary

One of the biggest takeaways from this episode is simple:

You do not need a new law to start being proactive.

This proposed PBM transparency rule may eventually become one of the most consequential healthcare disclosure regulations in decades.

But regardless of what happens politically or legislatively, employers already have enough information today to begin improving transparency, governance, and fiduciary oversight inside their health plans.

And honestly, if vendors push back aggressively against transparency requests, that probably tells you something important by itself.

At the end of the day, the employers that ask better questions now will likely be in a much stronger position later.

FAQ: PBM Transparency and Fiduciary Risk

What is the proposed PBM transparency rule?

The proposed Department of Labor rule would require PBMs to disclose detailed information related to rebates, spread pricing, clawbacks, indirect compensation, affiliate relationships, and audit rights.

Are PBMs already subject to disclosure requirements?

Yes. PBMs are already subject to compensation disclosure obligations under ERISA Section 408(b)(2) and the Consolidated Appropriations Act (CAA) of 2021.

What is spread pricing?

Spread pricing occurs when a PBM charges an employer one amount for a prescription while reimbursing the pharmacy a lower amount and retaining the difference.

What are pharmacy clawbacks?

Pharmacy clawbacks occur when PBMs recapture money from pharmacies after prescription transactions are completed, often impacting independent pharmacies significantly.

Why do audit rights matter?

Audit rights allow employers to verify disclosures, pricing arrangements, rebate structures, and financial flows within their health plans rather than relying solely on vendor representations.

What should employers do right now?

Employers should begin demanding greater transparency in PBM contracts, updating RFP requirements, requesting detailed disclosures, and improving fiduciary oversight processes immediately.

Listen to the Full Episode

To hear the full conversation and explore more discussions around healthcare transparency, PBM reform, ERISA compliance, and fiduciary strategy, visit The EOB Podcast.