On March 13, 2026, Congressman Rick Allen, Chairman of the Health, Employment, Labor, and Pensions (HELP) Subcommittee, introduced a new bill titled the “PBM Kickback Prohibition Act.” Touted as a “signature component” of the broader effort to lower prescription drug prices, the bill proposes a narrow but targeted amendment to the Employee Retirement Income Security Act of 1974 (ERISA). While the bill’s goals are commendable, its design raises serious questions about whether it can accomplish what it sets out to do.
What the Bill Does
The PBM Kickback Prohibition Act would amend ERISA Section 408(b)(2)(B) to add a new prohibition: when a pharmacy benefit manager (PBM) provides pharmacy benefit management services to a covered health plan, the PBM may not pay any direct or indirect compensation to a brokerage firm, broker, consultant, advisor, or any other individual for the referral of the covered plan’s or health insurance issuer’s business to that PBM.
In practical terms, the bill targets a specific practice: PBMs paying intermediaries—brokers, consultants, and advisors (including coalitions)—for steering employer-sponsored health plans toward that PBM’s services. Supporters of the bill argue that these payments create conflicts of interest, raise healthcare costs, and undermine the integrity of the advice that plan sponsors receive when selecting a PBM.
Not to Be Confused with the Anti-Kickback Statute
Despite its name, the PBM Kickback Prohibition Act should not be conflated with the federal Anti-Kickback Statute (AKS), which is a criminal statute under 42 U.S.C. § 1320a-7b(b). The AKS broadly prohibits the knowing and willful payment or receipt of remuneration to induce or reward referrals of items or services covered by federal healthcare programs such as Medicare and Medicaid. Violations of the AKS carry severe criminal penalties, including fines and imprisonment.
The PBM Kickback Prohibition Act operates in an entirely different legal framework. It is an amendment to ERISA, which governs employer-sponsored benefit plans in the private sector. The bill does not impose criminal penalties, implicate federal healthcare programs, or invoke the broad “remuneration” language of the AKS. Instead, it narrowly prohibits ERISA-covered plans from entering into agreements with a PBM that compensates consultants, brokers, and coalitions for the “referral” of the plan’s business to the PBM.
The Problem the Bill Is Trying to Solve
The bill is aimed at a real and well-documented problem in the pharmacy benefit ecosystem. Employer-sponsored health plans frequently rely on a network of consultants, brokers, and purchasing coalitions to help them navigate the complex PBM marketplace. These intermediaries hold themselves out as advocates for the plans, claiming they can negotiate favorable rates, lower pharmacy benefit costs, and secure better contract terms from PBMs. Plan sponsors (often human resources departments without deep pharmacy expertise) depend heavily on this advice when selecting and retaining a PBM. Indeed, brokers and coalitions frequently conduct market checks and RFPs for larger plan clients, effectively administering the very process that plans rely on to decide which PBM to select.
The trouble is that many of these intermediaries may not be exclusively loyal to the plans they advise. Some brokers are affiliated with PBMs, or sometimes owned by the same parent company as a PBM. Reports also indicate that PBMs pay undisclosed incentives or fees to brokers, consultants, and coalitions.[1] These incentives and fees create an obvious conflict of interest: the intermediary is being paid by the very entity it is supposed to be evaluating on the plan’s behalf. The bill seeks to sever this financial tie and ensure that the intermediaries advising plans are not simultaneously on the PBM’s payroll.
Why the Bill, As Drafted, May Fall Short
For all its good intentions, the bill has a critical structural weakness: it prohibits compensation paid “for the referral” of a plan’s business to a PBM. This language creates a loophole, because neither PBMs nor the consultants, brokers, and coalitions that receive their payments will ever characterize those fees as being “for the referral” of business.
Instead, these payments will be labeled as fees for “consulting services,” “data analytics,” “market access,” or any number of other euphemisms. PBMs and their intermediary partners have every incentive to restructure their compensation arrangements so that, on paper, the payments appear to be for legitimate, non-referral services. The bill does not define “referral” with the kind of specificity that would be needed to capture these artfully structured arrangements, nor does it include a broad “remuneration” standard akin to the AKS that would sweep in indirect or disguised payments.
Thus, even if this bill becomes law, it is likely that PBMs and intermediaries will continue their existing financial relationships, repackaged under new labels that fall outside the bill’s narrow prohibition. However, it is possible that the bill will undergo substantial redrafting as it is debated in committee. Frier Levitt will closely monitor this bill as it moves through the legislative process.
Whether or Not the Bill Passes, Plan Sponsors Must Evaluate Their Broker/Consultant Fees
Frier Levitt has discussed for years the need for plan sponsors of self-funded employee health benefit plans to oversee their service providers, including brokers and consultants. Just recently, several large plan sponsors were sued for excessive broker fees paid for voluntary benefit programs (see article here). Similarly, payments to consultants and brokers for recommending PBM arrangements, including excessive and unreasonable compensation, may increase your plan’s litigation risk.
How Frier Levitt Can Help
Frier Levitt has deep experience navigating the regulatory landscape governing self‑funded employer health plans. We regularly conduct audits for plan sponsors to ensure service providers (including PBMs, TPAs, consultants, and brokers) are compensated reasonably and in full compliance with ERISA. Our team evaluates contractual compliance, financial accuracy, and performance metrics to confirm alignment with fiduciary obligations and your organization’s financial interests. Contact Frier Levitt to review your pharmacy benefit design and to ensure that all fees or compensation paid by the plan (whether directly or through a PBM) to consultants, brokers, or coalitions are ERISA‑compliant.
[1] See, e.g., https://www.nationalalliancehealth.org/wp-content/uploads/NationalAlliance_Placemat_PBM2_H-allFINAL.pdf.
Senior Associate
