PBMs are already the most transparent part of the drug supply chain. A proposed Department of Labor (DOL) PBM transparency rule, however, is raising serious concerns about competition, affordability, and regulatory overreach. Experts are warning that the rule will increase costs, make it harder for new and innovative PBMs to compete, and is completely unnecessary. It all adds up to expensive new burdens without meaningful new transparency.

Here are three reasons why DOL should not finalize it as proposed:

Reason #1. Costs will soar for everyone, directly undermining President Trump’s affordability agenda and the concerns of families across the country.

With employers and the PBMs who serve them forced to build out expensive new reporting systems and take on additional compliance costs, patients will see higher costs for their prescription drug coverage. Spiwak noted in his piece that “piling on regulatory requirements increases compliance costs—costs that will ultimately be passed through to the American consumer at a time when health care affordability is a headline concern.” 

Another  Washington Examiner op-ed warned that “America’s healthcare market is about to get less fair and more costly, thanks to a badly written new set of compliance and declaration rules from the Department of Labor.” 

With no added value and significant harmful consequences, the message is clear: the Department of Labor should not finalize this harmful and redundant rule as proposed.

Reason #2. Mid-market PBMs, unions, and small businesses will be hit hardest by the higher costs and burdens created by the proposed rule, choking off growth and competition.

Ike Brannon, Senior Fellow at the Jack Kemp Foundation  sounded the alarm that the proposed rule will needlessly drive up costs for small businesses and is “the most expensive kind: a rule whose costs are buried in the paperwork itself.” He continued, “For a small employer without dedicated benefits staff, the compliance cost is heavy enough to drive them out of self-insuring altogether. Importantly, none of this affects what employers pay for drugs.” 

PCMA’s Head of Research, Amanda Frost, PhD, recently explained how the DOL rule will have unintended consequences and cause massive ripples, forcing small and mid-size PBMs to leave the market, leading to less competition and fewer choices for employers.

Several mid-market PBMs recently made similar arguments to the DOL and warned the proposal would add significant costs, leading to a chilling effect for new market entrants in the PBM industry. Another op-ed warned that the DOL rule “may end up creating a healthcare system where only the largest firms can afford to survive, competition shrinks as smaller players are pushed out, and the high costs policymakers set out to address become even more entrenched.”

Reason #3. The rule is redundant and unnecessary – Congress and President Trump enacted sweeping pharmacy benefit manager reform, and DOL should align with it.

With the enactment of the Consolidated Appropriations Act (CAA), PBMs are becoming the most transparent actors in health care. Wide-ranging CAA transparency provisions make the DOL rule outdated and as a result, it would provide no additional meaningful transparency for employers. Lawrence Spiwak of the Phoenix Center outlined the extensive information PBMs will provide on drug pricing and rebates, and why the DOL rule is “a regulatory double-dose.”

“The CAA’s reporting requirements, both in terms of scope and frequency, mark a significant increase from the information required under the Labor Department’s proposed rules. But unlike the Labor Department’s approach, under which fiduciaries would be obligated by regulation to review the mandatory reports to comply with ERISA, the extensive reports mandated by the CAA serve to provide information to plan administrators about whether their existing PBM provides a good value or whether they should switch to a competing PBM when their contract expires…

“The CAA represents a clear statement by Congress on exactly how the federal government should regulate transparency in the PBM industry.”

A Washington Examiner op-ed called the DOL rule “a compliance maze,” and concluded “If the Trump administration wants to help employers and the workers who depend on them, the fix isn’t a second rulebook. It’s aligning with the one Congress already wrote.”