Congress has recently passed H.R. 7148, which provides significant updates to pharmacy benefit rules. Title VII of this legislation—"Lowering Prescription Drug Costs"—establishes comprehensive transparency requirements and mandates fundamental changes to how pharmacy benefit managers (“PBMs”) handle rebates and other manufacturer compensation. The new rules establish several mechanisms by which there is an increase in transparency and oversight of pharmacy management benefits:

- (1) Increased reporting requirements from pharmacy benefit management services to group health plans at least twice per year. The reporting will contain the following information:

- Summary documents useful for PBM selection (estimated net price, cost per claim, fee structure, cost per participant)

- Summary documents for participants/beneficiaries (available upon request)

- Total net drug spending and rebates/remuneration received or expected

- Manufacturer copay assistance information (to extent feasible)

- Broker/consultant compensation disclosure (amounts paid for referral, consideration or retention of the PBM, including recipient identity)

- Benefit design parameters steering to affiliated pharmacies

- Total gross drug spending

- Self-Insured Large Plans (100+ participants) and full-insured large plans who opt in will be provided additional information:

- Drug-level data: contracted compensation paid by the plan to the PBM, compensation paid by the PBM to pharmacy and the spread for each claim by National Drug Code

- Dispensing channel information (retail, mail, specialty pharmacy, etc.)

- Wholesale Acquisition Cost (“WAC”) for brand drugs and Average Wholesale Price (“AWP”) for generic drugs as pricing benchmarks

- Net price after rebates per 30/90-day supply

- Participant out-of-pocket spending

- All rebates, fees and remuneration received by the PBM from applicable entities

- Therapeutic class-level spending and rebate data

- High-cost drug ($10,000+ or top 50) formulary rationale and year-over-year changes

- Affiliated pharmacy pricing comparisons (median, interquartile range, lowest network cost

- (2) A mandate that PBMs give 100% of rebates, fees, alternative discounts and other remuneration received from applicable entities—to the extent related to drug utilization or spending under the plan—to the group health plan. This includes manufacturer rebates, administrative/service fees tied to specific drugs, spread pricing, and pharmaceutical network arrangements. All rebates must be provided within 90 days after the end of a calendar quarter.

- (3) Increased fiduciary oversight of pharmacy benefit arrangements. Most importantly, this allows review of PBM rebate records to ensure that PBMs are not receiving unjust enrichment. PBMs that do not abide by the new 100% rule outlined above in any contract for pharmacy benefit services will be considered to have breached fiduciary duty (by participating in a prohibited transaction).

In addition to Congressional action, the Department of Labor (“DOL”) has also attempted to amend pharmacy benefit rules, with a slate of similar proposed rules. These rules would apply only to self-insured plans and are far vaguer than their H.R. 7148 counterpart. FNA Insurance Services, Inc. will provide updates when the rules are more concrete and finalized.

For employers sponsoring group health plans, these changes carry substantial compliance obligations, fiduciary considerations and operational implications that will require proactive planning. Employers should also be aware that the changes will likely result in PBM contract renegotiations, as current rebate amounts will no longer be permissible under federal law.

H.R. 7148 is set to become effective beginning January 1, 2029. The DOL Proposed Rules (to the extent they become finalized) would become effective July 1, 2026.