Initial and Semiannual PBM Compensation Disclosures
A covered provider would describe its services and its pay before the contract, then report actual amounts every six months. Here is what each disclosure holds.
Where This Fits.
Three pages in this series that go with this one.
PBM Fee Disclosure Proposed Rule (ERISA Section 408(b)(2))
The overview of the proposed rule, its status and its sources.
Who Must Disclose Under the Proposed PBM Fee Rule
Which companies would owe these disclosures in the first place.
PBM Audit Rights and the Proposed Fiduciary Exemption
How a fiduciary could check the numbers once they arrive.
The Initial Disclosure.
The initial disclosure goes to the responsible plan fiduciary in writing, reasonably in advance of entering into, renewing or extending the contract or arrangement. For an extension or renewal, the proposed text treats 30 calendar days as reasonable unless the parties agree to a longer period.
It starts with a description of the PBM services to be provided. It then states the direct compensation, meaning what the plan itself pays. The part that is new for pharmacy is the compensation the provider reasonably expects from other sources, which the proposal sorts into named categories.
The statute for brokers and consultants works the same way: a written description of services and of direct and indirect compensation, ahead of the contract. That is ERISA section 408(b)(2)(B), 29 U.S.C. 1108(b)(2)(B). The pharmacy proposal extends the idea to PBMs and to categories of pay that are particular to drug benefits.
The Categories Named in the Proposal.
Manufacturer payments. Rebates and other payments from drug manufacturers, which the Department says would be disclosed for the first time.
Spread. The gap between what the plan pays for a drug and what the pharmacy is reimbursed. If the plan pays more than the pharmacy receives, the difference is compensation to someone.
Pharmacy clawbacks. Amounts recouped from pharmacies for drugs dispensed to the plan’s participants.
Price protection arrangements. Inflation or price protection agreements, which are also on the proposed list.
The proposal also carries a catch-all, so compensation that does not fit a named category still has to be described. We have not confirmed its exact wording, so read the Federal Register text before relying on its edges.
The Semiannual Update.
After the contract starts, the provider would report again every six months. The semiannual report covers the same categories, but built on amounts actually received rather than amounts expected. The proposed text calls for actual aggregate compensation received.
The proposal also speaks to how disclosures are written. They are to be clear, concise and free of misrepresentation, and compensation is to be expressed as a monetary amount, which may be an estimate. It addresses plain language, machine-readable format and confidentiality agreements as well. We have not confirmed the details of those provisions or the deadline for each semiannual report, and neither the format nor the deadline should be assumed.
Read together, the two disclosures let you compare what was promised at signing with what happened. That comparison is the point of the rule, and it is why the audit right on our audit page matters.
Related Rules And Tools.
Broker and Consultant Compensation Disclosure
What health plan brokers and consultants must already tell you about their pay.
PBM Contracts for Employers
The contract terms that decide what you can see and audit.
Federal PBM Reform for Employers
The wider federal push on pharmacy benefit managers.
Laws And Sources
Federal Register, Improving Transparency Into Pharmacy Benefit Manager Fee Disclosure: the proposed rule, 91 Fed. Reg. 4348 (January 30, 2026), RIN 1210-AB37.
DOL Fact Sheet, Proposed Pharmacy Benefit Manager Fee Disclosure Rule: the Department of Labor summary of the proposal.
DOL News Release, January 29, 2026: the announcement of the proposed rule.
29 U.S.C. 1108 (ERISA Section 408): the statutory exemption for reasonable service arrangements, including section 408(b)(2).
General information, not legal or tax advice.
Quick Answers.
Short replies on this page’s topic, each tied to a fuller guide.
How often would a PBM have to update its disclosures?
As proposed, an initial disclosure before the contract is entered, renewed or extended, then semiannual disclosures. We have not confirmed the deadline for each semiannual report.
What is spread compensation?
The Department’s fact sheet describes it as the gap between what the plan pays for a drug and what the pharmacy is reimbursed.
Would the numbers be actual or estimated?
Initial disclosures concern compensation the provider reasonably expects, and the proposal allows estimates expressed as monetary amounts. Semiannual reports are based on amounts actually received.
The Rest Of This Series.
Self-Insured Only: What It Means for Fully Insured Plans
Which plans the proposal reaches and which it leaves out.
What Employers Can Ask Their PBM Now
Contract questions and documents you can request now.
Proposed Rule Status and What Is Not Yet Known
What is proposed, what has happened since, and what is unknown.
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