By Rachel Strauss – November 04, 2026
I spent 23 years selling PBM services for a company that started without a single rebate contract. So forgive me if I’m not moved by how complicated it’s going to be for pharmacy benefit managers to explain how they get paid. Especially the ones calling themselves “transparent”.
Back then, we had services to provide, customers to serve, and a business to run, and none of it depended on a rebate check. I knew managing a pharmacy benefit had real value. I also knew the employer paying for it deserved to understand the economics, and I haven’t changed my mind. To every broker, consultant, TPA, and employer group who took a leap on us with a big “$0” in our rebate column, sitting next to competitors’ rebate guarantees that only got bigger every year: you were my proof that better days were possible.
So when the Department of Labor released its new PBM compensation disclosure rule, my first thought was that we’re finally putting the right questions in writing. What did the plan pay, what did the pharmacy receive, what came from the manufacturer, and what stayed with the PBM or someone else in the arrangement? And can anyone actually check?
For an industry that never stops talking about transparency, those questions have produced an astonishing amount of resistance.
A rebate is not an answer
I’ve sat through enough finalist presentations to know the dance. The rebate guarantee gets bigger, the discounts look better, someone puts a savings number on a slide, and everyone in the room is supposed to feel good about it. I once watched a PBM “promise” a group more in rebates than the group’s entire Rx spend the year before. I told them that if they could get it in writing, they should take it. Let’s just say it never made it into the contract.
There’s always more behind the curtain. Picture a plan where a $400 generic is excluded, so it doesn’t even count toward the member’s out-of-pocket max, while a $3,000 drug carrying a PBM rebate sits comfortably on the formulary. The rebate report on that plan looks great. The plan and the employee both paid more.
A bigger rebate doesn’t tell an employer whether it bought the better deal. You need the cost of the drug, the other payments attached to it, what gets retained, and what the plan actually paid at the end of the day. You need definitions that mean something to someone other than the person who drafted the contract. And if a payment has been carefully kept outside your contract’s definition of “rebate,” it’s still money someone collects because of your business. Whatever it’s called on the invoice, you should be able to understand it.
I’ve spent years trying to explain this in plain English, usually through shopping, shoes, and makeup analogies (and an unapologetic attachment to the color pink). That’s how I earned the nickname PBM Princess. But this was never about crowning myself with a tiara. It was about getting people to care, and maybe getting people a little angry.
The new rule reaches beyond the rebate headline. For covered arrangements, it requires disclosures about manufacturer payments, spread compensation, pharmacy recoupments, price-protection payments, and other compensation, including relevant amounts received through affiliates, agents, and subcontractors.
That matters because employers don’t experience their pharmacy spend as a tidy org chart of affiliated companies. They experience a bill.
Audit rights are the real story
Disclosure is only as good as your ability to verify it, and this is the part of the rule I’d want every CFO to read twice. Then read it again.
Under this rule, covered plans choose their auditor. The provider must supply records reasonably necessary to verify the disclosures, including claims and transaction-level data and relevant contracts with pharmacies, manufacturers, and rebate aggregators, subject to reasonable confidentiality protections.
That’s a very different thing from being handed a report and told to trust it. A report is someone else’s version of the numbers. Access is how you check them. My husband stopped asking me what our daughter’s dance costs. He got his own login to the studio portal and now runs a monthly audit. He has since decided he’d rather not know. But he no longer has to take my word for it.
There are boundaries. These audit rights concern the accuracy of the required disclosures. They are not an unlimited invitation to examine every part of a company’s business. But within that scope, the plan finally gets to check the receipts, and for employers who have spent years taking a PBM’s word for it, that’s a big deal.
Patients feel this first
Most people will never read a PBM agreement. They meet it at the pharmacy counter, when a prescription gets rejected or they’re told to fill it somewhere else. Then they call their doctor, call the number on the card, and burn their lunch break trying to get an answer.
What’s sadder is that the one who has actually been paying the bill hasn’t read it either. That’s the American employer. It’s time to start, before the worst case happens.
Because sometimes it already has. Cole Schmitnick died of an asthma attack after his inhaler was excluded from coverage and he could no longer afford it. A prescription he had filled every month for years simply stopped, and nobody in the system flagged it to his doctor. That’s what it looks like when a PBM loses the plot on patient safety, and when nobody on the buying side is asking what’s driving coverage decisions.
The rule requires disclosures about formulary incentives and, in specified circumstances involving retained manufacturer or aggregator payments, explanations for excluding reasonably available therapeutic alternatives. It also requires disclosure of arrangements that direct patients to affiliated pharmacies.
Those disclosures will not automatically get someone’s medication covered. They will not guarantee a lower copay or unrestricted pharmacy choice. What they do give employers is a much better basis for asking why the formulary looks the way it does.
Employers can’t outsource the questions
Here’s where it gets uncomfortable. Employers have spent years asking for this information, and for plans covered by the rule, it’s coming. So who’s going to read it?
I will. I’ve already printed all 350 pages of the rule, and the popcorn (and wine) are on standby.
Someone has to reconcile the estimates against what was actually received, ask for a fee breakout that’s useful, decide whether the compensation is reasonable, and document what happened when something didn’t add up. A broker forwarding the disclosure isn’t doing that work, and a report sitting in a benefits folder hasn’t improved anyone’s purchasing decision.
If you’re signing a PBM contract this Q4, you should already be asking how that work gets done.
The rule’s detailed requirements apply to certain large, self-funded ERISA plans beginning with plan years starting July 1, 2027 or later. For calendar-year plans, that generally means January 1, 2028. Broader statutory disclosure duties already exist.
I wouldn’t wait for 2028 to start asking.
This is where the reckoning starts
I’m not interested in declaring every PBM bad. I spent 23 years selling PBM services, and I know there’s real work involved and real value to deliver. What I care about is whether the customer can understand what it’s buying, what everyone involved is getting paid, and whether that money is influencing what gets covered.
We’ve seen this movie before. Retirement plans looked a lot like this before 401(k) fee disclosure rules: opaque fees, a lot of trust, and very little verification. First came the whistleblowers, then the lawsuits, then the rules. Pharmacy benefits are on the same path, and employers who wait for a lawsuit to show them what their fiduciary duty looks like are in for a very expensive education.
There will be fights over definitions, allocation, access, and what counts as a useful disclosure. Good. Let’s have them with the numbers on the table, because the reckoning starts the day an employer stops accepting “that’s how the industry works” as an answer.
Show us the receipts. Just not the ones for dance. My husband already has those.