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This action will implement section 12 of Executive Order 14273 to improve employer health plan transparency into the direct and indirect compensation received by pharmacy benefit managers.

Statement of Need:

This regulatory action would improve transparency into pharmacy benefit manager fee disclosure with respect to group health plans subject to the Employee Retirement Income Security Act (ERISA). These disclosures are needed so that fiduciaries can assess the reasonableness of the contracts or arrangements with these service providers, including the reasonableness of the service providers’ compensation. These disclosure requirements would apply for purposes of ERISA’s statutory prohibited transaction exemption for services arrangements. This proposal implements section 12 of President Trump’s Executive Order 14273, Lowering Drug Prices by Once Again Putting Americans First, which instructs the Department to propose regulations to improve employer health plan transparency into the direct and indirect compensation received by pharmacy benefit managers.

Summary of the Legal Basis:

Under development

Alternatives:

Under development

Anticipated Costs and Benefits:

By addressing the influence of PBMs and promoting transparent pricing, President Trump’s Executive Order aims to create a fairer and more competitive prescription drug market that lowers costs and ensures accountability across the health-care system by better enabling plan fiduciaries to better monitor the PBMs actions to ensure the service contract or arrangement is reasonable. Estimates of the cost are still under development and will be reflected in the notice of proposed rulemaking.

Risks:

Under development