Consolidated Appropriations Act of 2026 Requires Greater Transparency by Pharmacy Benefit Managers

On February 3, 2026, Congress passed and President Trump signed into law the Consolidated Appropriations Act of 2026 (CAA). This law imposes significant, long-expected requirements on pharmacy benefit managers (PBMs) and other actors in healthcare insurance, foremost being reports on fees the PBMs charge insurance plans and employers.

Employers and insurance plans use PBMs to negotiate with drug manufacturers and pharmacies to set prices, determine patients’ access to medications, and persuade pharmacies to participate in health plan networks. PBMs charge fees for their services and derive revenue from shares of the drug rebates they negotiate with pharmaceutical companies. They also collect the spread between what they charge insurers and what they pay pharmacies for generic drugs.

Lately, PBMs have come under scrutiny largely due to emergence in the market of three large players -- CVS Caremark (CVS), Express Scripts (Cigna), and OptumRx (UnitedHealth Group) -- leading to concerns about fees charged and ultimately passed along to consumers. PBMs often steer business to their affiliated pharmacies, creating at least the appearance of conflicting allegiances. Under the new law, PBMs must share details with plan fiduciaries about their fees and other compensation.

Prior to the CAA, healthcare brokers and consultants were required to disclose their fees to healthcare insurance fiduciaries, but PBMs were exempt. The CAA subjects PBMs to disclosure obligations. Concurrent with the law’s enactment is a proposed USDOL rule, issued on January 30, 2026, with comment due on March 31, 2026, that would place PBM transparency under the ERISA fiduciary duty framework. With the subsequent passage of the CAA, some of the rule provisions are now superseded. However, the rule is still expected to move forward as it contains additional mandates, DOL/ERISA oversight, and a quicker timetable -- the rule would take effect in 2027 instead of the CAA’s 2029 effective date.

The recent push for greater cost transparency gained traction on April 15, 2025, with Executive Order 14273, Lowering Drug Prices by Once Again Putting Americans First, which specifically named PBM contracts with insurers and employers as contributing to higher drug costs. A key element of the CAA gives plan fiduciaries more information so they can determine the reasonableness and effectiveness of PBM arrangements to better protect healthcare plan participants. PBMs will be required to disclose what services they provide; how they are paid; details of the PBM contracts; and quality control information. The CAA explicitly sweeps PBMs and third-party administrators (TPAs) under ERISA’s disclosure requirements. PBMs and TPAs must disclose direct and indirect compensation paid to plan fiduciaries where the compensation is expected to be at least $1,000. Plan fiduciaries are barred from entering or maintaining contracts with PBMs or TPAs that fail to comply. PBMs will also be required to provide extensive pricing, compensation, rebate, utilization data, and information on gross and net costs of prescription drugs in the PBMs formulary. Finally, the CAA mandates the PBMs to pass 100% of rebates they receive from a drug manufacturer to the plan itself, requires quarterly accounting of those amounts, and imposes annual audit requirements.

The CAA will shine new light on the relationships among employers, especially those with self-insured plans, insurance carriers, PBMs, drug manufacturers, and pharmacies. It is also expected to increase costs at least initially as employers and insurers rush to understand and implement the CAA’s requirements.

For additional information, contact Genova Burns attorneys Edward J. Bonett, Jr., Esq. via email here, Patrick W. McGovern, Esq. via email here or William F. Megna, Esq., via email here.