The news: Under a new Department of Labor regulation, pharmacy benefit managers (PBMs) will be required to disclose previously opaque compensation details to large, self-funded employer clients twice a year starting in July 2027.

Disclosures will include payments from drugmakers and spread pricing arrangements—when PBMs charge health plans or employers more for drugs than they pay pharmacies and pocket the difference—and financial ties to brokers and consultants. Employers can also audit the PBMs they contract with.

The regulation will affect about 70 PBMs and 130,000 employers, per STAT, with the greatest impact on the “Big 3” of CVS Caremark, Cigna’s Express Scripts, and UnitedHealth’s Optum Rx, which together administer about 80% of US prescriptions.

Why it matters: PBMs wield significant influence over the pharmaceutical supply chain by managing health plans’ drug formularies, which shape medication choices and patients’ out-of-pocket costs. They also use their purchasing power to negotiate rebates and discounts from drug manufacturers.

But PBMs' obscure pricing and compensation practices have left many large employers unsure how much PBMs earn from managing their prescription drug benefits and whether they're overpaying. Twenty-three percent of employers using one of the Big 3 PBMs are unsure of their contract terms, per a June survey by the National Alliance of Healthcare Purchaser Coalitions.

Implications for drugmakers and employers: Greater visibility into PBM contracts will likely push more large employers to reconsider traditional PBMs amid growing dissatisfaction with their current partners. Across all PBMs, Net Promoter Scores fell from an already poor -10 in 2024 to -25 in 2026, per a just-released WTW employer survey. The findings suggest employers are increasingly open to alternatives, with 64% considering rebidding their contracts or switching PBMs.

Meanwhile, Congress has stepped up PBM transparency and accountability reforms, and the Federal Trade Commission (FTC) reached settlements with leading PBMs earlier this year over alleged anticompetitive practices. Together, these pressures are beginning to erode large PBMs’ longstanding influence, though their deep integration into the healthcare system makes that dominance difficult to completely dismantle.

Legal challenges to the Labor Department’s new regulation appear likely, and even if upheld, it may increase employer visibility without materially changing PBM operations. That will drive employers to explore offerings such as smaller, “pass-through” PBMs that promise to eliminate hidden fees, as well as direct-to-employer models that negotiate prices with drugmakers while bypassing traditional formularies and opaque rebate structures. Companies in this space, like Andel and GoodRx, have recently expanded their employer-direct offerings, giving businesses more options to manage drug benefits and secure lower net prices.

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