The U.S. Department of Labor (DOL) will require pharmacy benefit managers (PBMs) to disclose to employers how they get paid, according to a report.
Under a regulation expected to be released Thursday, PBMs will have to give employer clients detailed information on the prices they pay for drugs and the payments they receive from drugmakers, The Wall Street Journal reported on Wednesday, citing people with knowledge of the matter. A DOL official said the rule is an effort to lower healthcare costs.
PBMs are drug middlemen that manage hundreds of billions of dollars of drug spending. They say they reduce drug costs partly by negotiating better pricing with drugmakers, while regulators and lawmakers have long criticized them as opaque, the report noted.
What the New PBM Rule Requires
Under the new rule, the PBMs must tell employers upfront about compensation they expect from drugmakers and pharmacies, then update them every six months on actual earnings. Employers would also get the right to audit them, as per the report.
PBMs must also disclose rebates and other payments from drugmakers, including any that might lead patients to be steered to certain drugs, and “spread pricing,” in which an employer may pay more for a drug than a pharmacy is reimbursed, leaving a margin the PBM can keep, the report added.
The rule takes effect in July and applies to self-insured employers, which pay their own health claims rather than buying traditional insurance.
What Drug Middlemen Are Doing About Transparency
Big PBM players, including Express Scripts of The Cigna Group (NYSE: CI) and Caremark of CVS Health Corp. (NYSE: CVS), are rolling out new models they say offer greater transparency, the report said.
David Marin, president of a trade association representing PBMs, said the rule adds expensive reporting burdens that will harm small and mid-sized PBMs without new meaningful transparency, the report noted.
A proposed version of the rule drew opposition from big PBMs, which argued it should be withdrawn because it overlapped with a separate law Congress passed in February, the Journal noted.
The Department of Labor, Cigna and CVS did not immediately respond to Benzinga’s request for comment.
Proposal Sought to Curb Hidden Drug Pricing Practices
In January, the DOL’s proposed version called for PBMs to fully disclose their compensation to self-insured group health plans, which cover approximately 90 million Americans. It targeted spread pricing, rebates, and clawbacks, which are payments recouped from pharmacies. “When middlemen are forced to operate in the sunlight, American workers and their families win,” said Secretary Lori Chavez-DeRemer at the time.
Disclaimer: This content was produced with the help of AI tools and was reviewed and published by Benzinga editors.
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