On April 15, 2025, President Trump signed an executive order aimed at reducing drug costs and increasing transparency among Pharmacy Benefit Managers (PBMs) and other intermediaries in the drug supply chain. A central focus of the order is improving fiduciary transparency for employer-sponsored health plans by requiring PBMs to disclose all forms of compensation they receive.
Frier Levitt attorneys Jonathan Levitt, Terence Park, and Matthew Modafferi explore the implications of the order in their article published in BenefitsPRO, titled “Trump’s PBM Compensation Moves: Evolving Regulations and Compliance Obligations.”
The executive order directs the Department of Labor (DOL) to propose regulations that would require PBMs to disclose both direct and indirect compensation. This builds on existing fiduciary obligations under ERISA and the Consolidated Appropriations Act (CAA), which already require plan fiduciaries to monitor service providers and ensure that plan expenses are reasonable. The order also aligns with ERISA Section 408(b)(2)(B), as amended by the CAA, which mandates that brokers and consultants disclose their compensation.
If adopted, the new regulations could strengthen fiduciaries’ oversight of PBMs, enabling them to identify excessive fees or potential conflicts of interest. However, should the DOL extend beyond existing statutory authority, the rules could face legal challenges. The proposed regulations are due by October 12, 2025.
In sum, the executive order signals a shift toward greater PBM accountability and transparency, reinforcing existing fiduciary duties under ERISA and the CAA. Employer health plans should prepare for heightened compliance obligations and evolving oversight requirements in their PBM relationships.
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