PBM Reform Is Law: What the 2026 Appropriations Act Means for Employer Plans and Broker Disclosures

After years of proposals that stalled, federal pharmacy benefit manager (PBM) reform became law on February 3, 2026, when the President signed the Consolidated Appropriations Act, 2026. For employer group health plans, two sections matter most: section 6701 (reporting and transparency) and section 6702 (rebate pass-through and ERISA service provider rules).

Here's a practical overview for brokers advising self-funded, level-funded, and fully insured clients.

Section 6701: PBM reporting to employer plans

PBMs serving group health plans and group health insurance issuers will have to report to the plan on a wide range of pharmacy data, every six months or quarterly on request. According to summaries from Miller & Chevalier and Hall Render:

• Detailed reports go to self-funded plans of larger employers (at least 100 employees) or large plans (at least 100 participants). Large insured plans can opt in. Reports include drug-level negotiated costs and pharmacy reimbursement, net spending after rebates, participant out-of-pocket costs, rebates received, manufacturer copay assistance, spending by therapeutic class, formulary tiers and utilization management, and information about affiliated pharmacies.
• A summary document goes to all group health plans, self-funded and insured, regardless of size.
• Participant notices. Plans must give participants an annual written notice about the reporting requirements, and participants can request certain claims-level information.
• Contracting conditions. Plans, issuers, and PBMs can't contract with drug manufacturers, rebate aggregators, group purchasing organizations, or related entities unless those entities agree to provide the information needed for the reports.
• Penalties. The Department of Labor can assess penalties of up to $10,000 per day for reporting violations and up to $100,000 for providing false information.
• Rulemaking. DOL must issue regulations, including a standard reporting format, within 18 months.

Section 6702: 100% rebate pass-through and ERISA 408(b)(2)

Section 6702 amends ERISA's service provider exemption so that a PBM contract will only be considered "reasonable" if, among other requirements, the PBM passes through 100% of rebates, fees, alternative discounts, and other remuneration related to the plan's drug utilization or spending. Pass-through payments are made quarterly, must be fully disclosed, and are subject to plan audit rights. Rebate aggregators and GPOs must remit rebates to the PBM within 45 days after each quarter ends. The law also includes an exception intended to protect plan fiduciaries who didn't know about a PBM's noncompliance.

When it takes effect

Most of the group health plan requirements don't apply right away. NFP's summary notes that for calendar-year plans, most requirements apply starting January 1, 2029, while certain ERISA compensation disclosure changes may apply sooner. Expect PBMs to begin revising contracts well before then, and expect DOL guidance in the meantime.

A related DOL proposal

Separately, on January 30, 2026, the Department of Labor proposed a rule titled "Improving Transparency Into Pharmacy Benefit Manager Fee Disclosure." It would require PBMs, and affiliated providers of brokerage and consulting services, to disclose their direct and indirect compensation to fiduciaries of self-insured ERISA group health plans. Comments are due March 31, 2026. It's a proposal, not a final rule, but brokers with any affiliation to a PBM should read it closely.

What it means for your clients

• Self-funded and level-funded plans have the most to gain. More data and rebate pass-through give plan sponsors leverage in PBM negotiations and audits. Ask clients when their PBM contract renews and whether the next contract should anticipate these rules.
• Fully insured plans receive the summary document, and large insured plans can opt into detailed reporting. Most of the economic impact will flow through carriers.
• Fiduciary process. These rules reinforce that choosing and monitoring a PBM is a fiduciary decision. Document how PBM proposals are evaluated.

A good moment to revisit your own disclosures

PBM reform is about compensation transparency, and the same principle has applied to brokers and consultants since the Consolidated Appropriations Act, 2021. Under ERISA section 408(b)(2)(B), effective December 27, 2021, brokers and consultants who reasonably expect to receive $1,000 or more in direct or indirect compensation for services to an ERISA group health plan must disclose that compensation, in writing, to the responsible plan fiduciary. DOL's Field Assistance Bulletin 2021-03 provides temporary enforcement guidance.

A quick self-check:

1. Do you have a written disclosure on file for every ERISA group health plan client, including insured plans?
2. Does it describe all compensation, including commissions, bonuses, overrides, and non-monetary compensation from carriers and vendors?
3. Did you provide it before the contract or renewal, and update it when compensation changed?
4. Are ancillary products and vendors covered, such as stop-loss, PBM, or ICHRA administration referrals?

Clients will hear a lot about PBM transparency this year. Brokers who can show their own disclosures are in order will be in a stronger position to lead those conversations.

Next steps

• Identify clients whose PBM contracts renew in 2026 and 2027.
• Ask PBMs and carriers how they plan to comply and what reporting they can provide now.
• Review your own 408(b)(2) disclosures.
• Watch for DOL rulemaking under the new law and the outcome of the January proposal.