NACDS praises Labor Department rule requiring PBMs to disclose their compensation

ARLINGTON, Va. — The National Association of Chain Drug Stores (NACDS) welcomed a new Department of Labor rule requiring pharmacy benefit managers to disclose how much self-insured employer health plans pay them. The group also urged regulators to enforce the rule.

The final rule applies to self-insured health plans governed by ERISA, the federal law regulating employer benefit plans. PBMs must disclose their compensation to plan sponsors and fiduciaries, tell employers up front how much they expect to earn, and provide updates every six months. Plan sponsors can audit these disclosures annually using an auditor of their choice.

"NACDS commends the Department of Labor for finalizing this rule – another important aspect of the comprehensive reforms that are needed," said Steven C. Anderson, president and chief executive of NACDS. He said the rule gives employers, who are legally responsible for ensuring their PBM contracts are reasonable, the information they need to meet that obligation.

Anderson said chain pharmacies see the issue "from both sides”: NACDS member companies employ nearly 3 million people and sponsor their own health plans, while also working every day within what he called "opaque PBM networks and reimbursement systems."

He said employers could better hold PBMs accountable with a clearer picture of how they are paid, including rebates, fees, spread pricing and what PBMs actually reimburse pharmacies. Without that transparency, Anderson said, health benefit dollars can disappear “into the convoluted compensation structure of vertically integrated plans and PBMs” instead of paying for employees’ care and medications.

He also cautioned that disclosure alone is not enough. “Transparency is only as strong as its enforcement,” Anderson said. He noted that vertically integrated plans and PBMs have “a long record of resisting federal and state oversight.” NACDS urged the Labor Department to pair the rule with strong enforcement to ensure fairer treatment for employers, employees, and pharmacies.