Your company pays the drug bill. A middleman called a pharmacy-benefit manager, or PBM, negotiates the prices. Critics say the employer can't see what the middleman keeps. A new Labor Department rule is meant to change that. Anna Wilde Mathews and Liz Essley Whyte reported it in Thursday's Journal, Oct. 29.
PBMs manage hundreds of billions of dollars of drug spending. The rule was expected out Thursday, and people with knowledge of it described it to the Journal. PBMs will have to show employer clients two things in detail. One is what they pay for drugs. The other is what drugmakers pay them. A Labor Department official said the goal is lower healthcare costs. The rule follows an executive order from April 2025. The rule is one step in a fast-moving effort to remake the industry.
Regulators and lawmakers have faulted PBMs for years as a business nobody can see into. Their charge is that a middleman can earn more when patients use costlier drugs, and that pushes up spending for everyone. Jenny Goins, interim chief executive of the National Alliance of Healthcare Purchaser Coalitions, called a proposed version of the rule "a huge deal for employers." What matters, she said, is that employers finally see in detail what they pay for.
The industry says it's already moving
PBMs say they lower drug costs, in part by pushing drugmakers for better prices. Two of the biggest, Cigna Group's (CI) Express Scripts and CVS Health's (CVS) Caremark, say they're rolling out new models that are more open. They made those changes under pressure from the Federal Trade Commission and from lawmakers in the states and in Washington. Neither stock is in a model book. UnitedHealth (UNH), whose Optum Rx is another large PBM, is held at weight in 9 books, with nothing added. This piece is about your plan, not theirs.
Our read
Health Costs. If you own a business and sponsor a health plan, you're usually a fiduciary for that plan. That means you're expected to know what it costs and whether the costs are reasonable. For years the drug piece has been hard to see into. This rule is meant to open it up. Once it takes effect, ask your broker or your PBM for the disclosure it requires. Put the drug prices and the drugmaker payments next to what your plan paid. If your PBM says it's already transparent, the report gives you a way to check. If you're an employee, this matters too. Drug costs feed into your premium, and a company that reads the report is in a better spot to bargain.
Here's the check this week. Find your plan's renewal date and your PBM's name. The PBM's name is often printed on the back of the member ID card. If you sponsor the plan, add one line to the renewal checklist that asks for the PBM pay disclosure. If you're an employee, open enrollment is under way at many companies right now. Look up the drug your family fills most often on the plan's drug list, called the formulary, and note its copay tier. That's a number a better contract can help move. Bring the renewal packet to your next review and we'll go through it together.