The Trump administration has locked in a regulation that will require pharmacy benefit managers to disclose fees and compensation to self-funded employers.
The rule, finalized by the Department of Labor's Employee Benefits Security Administration, aims to ensure that employers can see what drug manufacturers, pharmacies and other entities are paying their PBMs and any affiliated brokers and consultants.
The department said in an announcement that this data will support employers in negotiating contracts and pushing to lower drug costs for their workers and their dependents.
“This is a win for every American worker who has ever paid too much at the pharmacy counter,” said Secretary of Labor Keith Sonderling in the announcement. “For years, PBMs have operated in the shadows, pocketing hidden fees while workers and employers were left in the dark."
Under the rule, PBMs must disclose several key sources of compensation, including manufacturer rebates, any compensation when the price for a drug paid by the plan exceeds reimbursement to the pharmacy and any payments recouped from pharmacies for dispensed drugs.
The rule was first proposed in late January, and while it enjoys support with employer groups, pharmacy benefit managers have pushed back on the changes.
The Pharmaceutical Care Management Association, the leading lobbying organization for PBMs, in March called for the agency to rescind the proposed rule, as after it was unveiled, lawmakers passed industry reforms as part of a bipartisan health funding package.
Those congressional PBM reforms include multiple provisions around transparency, and PCMA argued that the DOL rule would create duplicative reporting and disclosure requirements for these companies to navigate.
In a statement Thursday, PCMA President David Marin said that the organization is "extremely concerned that it will lead to higher patient costs and less competition, the opposite of the Department’s stated intent."
"The Department has made modest efforts to harmonize the rule with the recently enacted federal law, but we are concerned it may have exceeded Congress’s intent and its own authority," Marin said. "Patients, employers and unions will have no new meaningful transparency from this action, but prescription drug benefits will now be more expensive."
"This could also lead to greater concentration in our industry as smaller PBMs face excessive reporting demands," Marin added.
DOL said in the announcement that the final rule "implements the bipartisan transparency reforms Congress enacted earlier this year." One of the key goals, the agency said, is to better support employers and plan sponsors in meeting their fiduciary duties under the Employee Retirement Income Security Act (ERISA).
As they face additional pressure on their ERISA compliance, employers cheered the DOL rule and PBM reform more broadly. The ERISA Industry Committee (ERIC) said in a statement that the rule will offer "a clearer view of what their health plans actually pay."
"We applaud the administration for advancing much needed transparency related to PBMs and affiliated entities," said James Gelfand, CEO of ERIC, in the release. "Large employers pay for their workers’ prescriptions, but many can’t see how much of that money their PBM and any affiliated entity keeps."
"This rule will fill a critical gap in the legislation Congress passed earlier this year, for the first time giving employers a real view into so-called 'spread pricing' arrangements and helping plan sponsors to improve the affordability of prescription drugs for working families," Gelfand said.