What to Ask Your PBM Before You Sign or Renew.
A pharmacy benefit manager is a plan vendor, so choosing and monitoring it is a fiduciary task. Here are the questions to ask, and where the January 2026 DOL proposal stands.
Start Here.
General information, not legal or tax advice. Check the cited sources before you act.
Selecting and Monitoring Health Plan Service Providers
The overview page for this series, with all six topics and the sources.
TPA Contracts and Fiduciary Roles
Who is the plan administrator, who is a named fiduciary, and how co-fiduciary liability works.
Monitoring on a Calendar
A plan-year rhythm for checking reports, fees, complaints and contract terms.
The Plan Pays One Firm and the Money Moves Through Several.
A PBM sits between the plan, pharmacies and drug manufacturers, and its income can come from more than one place. That is why the fee questions in the Department of Labor’s guide, such as whether the provider receives third-party compensation like commissions, finder’s fees or revenue sharing, matter so much here.
The statute already reaches PBMs. ERISA section 408(b)(2)(B)(i) provides that, for pharmacy benefit management arrangements, the entity is treated as indirectly furnishing services to the plan. The group health plan disclosure framework described on the fee reasonableness page is therefore part of the picture for a PBM contract.
The January 2026 DOL Proposal.
On January 30, 2026, the Department of Labor published a proposed rule titled Improving Transparency Into Pharmacy Benefit Manager Fee Disclosure, 91 Fed. Reg. 4348. According to the Department’s fact sheet, it would require PBMs and certain affiliated brokers and consultants to disclose their direct and indirect compensation to fiduciaries of self-insured group health plans. Disclosures would be due before a contract is entered into, renewed or extended, and then semiannually. The proposal would also let plan fiduciaries audit the disclosed information, and it includes a proposed administrative exemption that would apply if a PBM fails to comply.
Status: this is a proposal. It is not in effect. When we checked for this page we did not find a final rule, and the final wording and dates may differ from the proposal. Our overview of the proposal is at the PBM fee disclosure proposed rule.
Four Groups of Questions for the PBM.
How the PBM is paid. Is it through administrative fees, a share of rebates, a difference between what the plan pays and what the pharmacy is paid, fees from affiliated pharmacies, or other sources? Does the PBM keep any difference between those two amounts? Are rebates passed to the plan in full, how often, and how is the amount measured?
How terms are defined. How does the contract define generic, brand and specialty drugs? Which maximum allowable cost lists apply, and who may change them? How is pricing at affiliated mail and specialty pharmacies different from pricing elsewhere?
How the formulary and clinical programs work. How much notice is given before a formulary change? What fees attach to clinical programs and utilization management, and what results are reported?
How the plan can check the work. What audit rights does the plan have, and how far back do they reach? Can an independent auditor see the records? What claim-level data does the plan receive, and in what format? What happens to the data and to claims run-out at termination? Our guides on PBM contracts and pharmacy claims monitoring go deeper on the contract terms and the yearly reconciliation.
Get the Answers Into the Agreement.
Ask for the answers in the contract itself, not only in a sales deck or proposal. A statement that appears in a presentation but not in the agreement may not bind the PBM, so have counsel confirm that pricing terms, rebate terms and audit rights sit in the signed document. Pricing definitions usually live in the definitions section and in exhibits, so read those first and note the date of the version you reviewed.
Keep the signed copy and every exhibit in the selection file, as the Department of Labor advises for all service contracts.
Keep the Answers in the File.
Written answers belong in the selection file described under documenting the request for proposal, and the same questions come back at each review on the monitoring calendar. If your plan is fully insured and the carrier runs the pharmacy benefit, ask the carrier the same questions. The Department of Labor describes the proposal as aimed at self-insured plans, so the proposed disclosure would not reach every plan.
Laws And Sources
29 U.S.C. 1108 (ERISA Section 408): Subsection (b)(2)(B)(i) treats a PBM as indirectly furnishing services to a group health plan.
Federal Register, Improving Transparency Into Pharmacy Benefit Manager Fee Disclosure, 91 Fed. Reg. 4348 (Jan. 30, 2026): The proposed rule.
Department of Labor, Fact Sheet: Proposed Pharmacy Benefit Manager Fee Disclosure Rule: EBSA summary of the proposal.
Department of Labor, Understanding Your Fiduciary Responsibilities Under a Group Health Plan: Questions to ask about fees.
General information, not legal or tax advice.
Quick Answers.
Short replies on this page’s topic, each tied to a fuller guide.
Is the DOL PBM fee disclosure rule in effect?
No. The Department of Labor proposed it on January 30, 2026, and it is a proposal only. When we checked for this page we did not find a final rule.
Do these questions apply to a fully insured plan?
Yes, ask the carrier the same questions if it runs the pharmacy benefit. The Department of Labor describes the proposed rule as aimed at self-insured group health plans.
Can the plan audit its PBM?
Audit rights come from the contract today. The proposal would let fiduciaries audit disclosed information but is not in effect, so ask for audit terms in writing before you sign.
The Rest Of This Series.
The Prudent Selection Duty
What ERISA section 404(a)(1) requires when you choose a TPA, PBM, broker or other vendor.
Documenting the RFP Process
The records that show every bidder got the same questions and that the choice was reasoned.
Fee Reasonableness and 408(b)(2)
The statutory exemption, the broker and consultant disclosure for group health plans, and what to do when it is missing.
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