The U.S. Department of Labor released a proposed rule earlier this year that would create transparency requirements for pharmacy benefits managers (PBMs) doing business with self-insured group health plans. The rule requires detailed compensation disclosure to a plan’s fiduciary (i.e., the person or entity — typically an employer — who is financially responsible for the plan). In addition, the Consolidated Appropriations Act of 2026, enacted February 3, includes provisions affecting PBM transparency and compensation practices. In Arkansas, these proposed federal actions would add a new layer of oversight in addition to state laws regulating PBMs.
PBMs administer prescription drug benefits on behalf of health plans and employers. They negotiate rebates with drug manufacturers, establish formularies, and reimburse pharmacies for dispensing prescription drugs. This position as a middleman between manufacturers, health plans, and pharmacies has in recent years placed PBMs under increasing state and federal government scrutiny.
Arkansas Seen as Leader in PBM Regulation
Health insurance plans offered by insurance companies are primarily regulated at the state level, while self-insured plans offered by employers are regulated under the federal Employee Retirement Insurance Security Act (ERISA). ERISA generally limits the extent to which states may regulate self-insured health plans. Because PBMs often serve those plans, state laws regulating PBMs are frequently challenged on the grounds that they are preempted by federal law.
Arkansas has been a leader in state-level regulation of PBMs. It has established laws and regulations governing pricing behavior, transparency, licensure, and other aspects of PBM operations. These broadly apply to PBMs serving health benefit plans in the state, regardless of whether those plans are subject to ERISA. Notable Arkansas laws and regulations include:
- Act 900 of 2015 requires a PBM to reimburse a pharmacy for a generic drug at or above the pharmacy’s cost to acquire the drug.
- The Arkansas PBM Licensure Act of 2018, implemented through Arkansas Insurance Department Rule 118, establishes a licensure requirement for PBMs operating in the state and prohibits PBMs from engaging in practices such as:
- Imposing gag clauses, or contract provisions that prohibit pharmacists from telling patients the total cost of a drug or offering lower-cost alternatives.
- Spread pricing, in which a PBM charges a health insurer more than it pays a pharmacy for a given drug, and keeps the difference.
- Paying larger reimbursements to PBM-affiliated pharmacies than to non-affiliated pharmacies for the same drugs.
- Arkansas Insurance Department Rule 128, issued in 2024, requires PBMs and health plans to disclose pharmacy compensation data to the Arkansas Insurance Department so the department can determine whether pharmacy reimbursement is “fair and reasonable.”
- Act 624 of 2025 bans PBMs from owning or acquiring pharmacies in the state. In practice this requires companies that both operate pharmacies and provide PBM services to choose one line of business to continue.
Arkansas laws and regulations regarding PBMs have repeatedly faced legal challenges based on ERISA preemption. A challenge to Act 900 reached the U.S. Supreme Court, which in 2020 ruled in Rutledge v. PCMA that ERISA did not preempt the law. In 2025, a federal district court dismissed a challenge to Rule 128, and Act 624 was preliminarily enjoined in the same year and remains blocked as a challenge to that law continues.
New Federal Action
The Department of Labor’s proposed rule for PBMs would require them, under ERISA, to disclose to fiduciaries of the self-insured group health plans they contract with a variety of compensation information, such as manufacturer rebates, methodologies for setting drug prices, and payments made to pharmacies. The rule would also grant audit rights to those fiduciaries.
The proposed rule does not appear to directly conflict with Arkansas laws regulating PBMs, largely because it regulates a different reporting relationship. Arkansas law primarily regulates reimbursement practices between PBMs and pharmacies and requires PBMs and health plans to submit data to the Arkansas Insurance Department, including data on reimbursement, dispensing fees, claims volume, pharmacy network retention, and projected cost impacts. In contrast, the proposed federal rule focuses on PBM compensation arrangements with self-insured group health plans.
Relevant Provisions of the Consolidated Appropriations Act of 2026
The Consolidated Appropriations Act of 2026 includes several provisions affecting PBMs and their relationship with health plans, including transparency requirements and prohibitions against certain compensation practices. Key provisions include:
- A requirement that PBMs pass 100% of manufacturer rebates to contracted health plans.
- A requirement that PBMs report drug-level compensation data every six months, or quarterly upon request, to fully insured group health plans with at least 100 members.
- Establishment of penalties for failure to make timely disclosures or knowingly providing false information.
These provisions are effective January 1, 2028, for PBMs doing business with Medicare Advantage or Medicare Part D Plans. Applicability expands to all PBM contracts for plan years beginning on or after August 3, 2028 (specified in the law as “the date that is 30 months after the date of enactment”).
Another provision took effect immediately upon the measure becoming law: PBMs are now designated as “covered service providers” under ERISA, which means they must disclose direct and indirect compensation to plan fiduciaries before contracts are entered into or renewed. The disclosures are intended to help fiduciaries evaluate the reasonableness of compensation and identify potential conflicts of interest. PBMs that fail to comply may face monetary penalties.
The Department of Labor’s proposed rule, if finalized, would operate alongside these statutory changes to expand federal transparency requirements for PBMs serving self-insured group health plans. PBMs would be required under federal law to disclose compensation information to plan fiduciaries while also being required under Arkansas law to disclose reimbursement data to the Arkansas Insurance Department. Though serving different purposes, both types of disclosure are intended to bring transparency to an industry often criticized for operating in the shadows.
