Plan sponsors are about to become far more demanding, data￾driven and assertive in how they manage relationships with pharmacy benefit managers, or PBMs.

Armed with federal reforms (enhanced reporting, compensation disclosure and rebate pass-through); growing state PBM regulation (transparency, fees, fair-pharmacy protections and oversight); and the looming threat of litigation, the balance of power is shifting toward plan sponsors.

PBMs, PBM consultants and brokers that lean into this shift — rather than resist it — will be best positioned to protect and grow relationships.

The New Reality: Sponsors in the Driver's Seat

Regulatory and market pressures are converging around transparency, reasonable compensation and demonstrable value.

It's been a busy first quarter of the year: The Consolidated Appropriations Act of 2026 includes significant PBM reforms; on Feb. 4, the Federal Trade Commission settled with Express Scripts Inc., targeting incentives to profit from higher drug prices; on Jan. 29, the U.S. Department of Labor proposed a rule on PBM fee disclosures.

Given these recent developments, layered atop PBM laws in all 50 states, it's no wonder that plan sponsors are being urged by their advisers and counsel to treat PBM contracts as high-risk, high-dollar fiduciary relationships that require active oversight — not set-and￾forget administration.

This wave of reform doesn't just raise the stakes for plan sponsors; it rewrites what they can and should expect from their PBM partners. Instead of defending opaque economics, PBMs, consultants and brokers now have an opening to use transparency as a strategic asset — simplifying how they get paid, making audit-ready data part of the service model and co-designing contracts that are easy for fiduciaries to explain and defend.

The players who embrace that shift first will be the ones who turn new rules into deeper, stickier plan sponsor relationships.

In practice, this means that sponsors will expect visibility into all revenue streams tied to their plan, including rebates, spread, administration fees, data fees and affiliate arrangements. They will use that information to benchmark costs, challenge legacy deal structures and justify changes to committees and boards.

Audit rights, data access and fee reasonableness reviews will move from boilerplate to focal points in negotiations and renewals. In this environment, any PBM or intermediary perceived as opaque, defensive or slow to adapt will be at real risk of facing a request for proposals and replacement.

What to Expect From Plan Sponsors

As transparency standards tighten, sponsors will look for partners that make it easy to meet their governance and compliance obligations. Counsel and account teams should expect the following themes in conversations with plan sponsors and their counsel.

Clear Economic Story

Plan sponsors will want a concise explanation of how the PBM or intermediary makes money on their book of business — across spread, rebates, administration fees, and any affiliate or manufacturer relationships. They will expect that explanation to be consistent across the contract, disclosure materials and reporting.

Data That Connects to Decisions

Sponsors will increasingly ask for reporting that shows not just gross spend and discounts, but net cost after rebates and fees, broken down by channel and class.

They will use this to evaluate whether the PBM's clinical and formulary strategies truly minimize net cost. Counsel for the PBM should understand the reporting and be ready to negotiate and document the input data and report frequency.

Built-In Auditability

Instead of treating audits as adversarial, sponsors will look for partners whose contracts, data feeds and processes are audit-ready. They will expect clear rights to independent review, reasonable look-back periods and straightforward access to underlying claims and pricing data.

Fiduciary-Friendly Framing

Even though a PBM's direct audience may be benefits or finance, those stakeholders answer to fiduciary committees, boards and sometimes regulators.

Benefits and finance will expect their broker or PBM to help them tell a defensible story: "We understand how our PBM gets paid, we monitor performance, and we take action when necessary." PBM counsel can help put those benefits into perspective for the client to use with their fiduciaries.

How to Approach Contract Negotiations and Renegotiations

Upcoming requests for proposals and renewals are opportunities for PBMs and intermediaries to reposition themselves as proactive partners. A three-pillar approach of transparency, control and outcomes provides legal structure that counsel can provide their deal teams with confidence.

Lead With Transparency Options

Offer multiple compensation structures (e.g., traditional spread, pass-through with administration fee, hybrid) and clearly illustrate how dollars flow under each. Provide sample disclosure schedules that can be attached to the contract, showing exactly what will be reported (e.g., categories of compensation, timing, formats).

Be prepared to commit to semiannual or annual compensation and performance reporting that sponsors can drop straight into their committee materials. The more the contract feels like a tool to manage the relationship, not just a legal shield, the more likely the PBM is to retain and expand business.

Strengthen Sponsor Control and Oversight

Propose contract language that formalizes audit rights, including scope, frequency and data access, in a way that is workable for both sides. Clarify how sponsors can influence key levers — such as formulary exceptions, specialty carveouts and clinical program design — so they don't feel locked into a black box.

Build in structured review points, e.g., annual strategy sessions, to revisit guarantees, clinical programs and network design based on experience.

Tie Economics to Measurable Outcomes

Align guarantees and performance metrics with the sponsor's top concerns: trend, specialty spend, high-cost claimants, member experience or some combination.

Consider putting a small portion of the PBM's compensation at risk tied to agreed outcomes (e.g., net cost trend versus benchmark, adherence to targeted conditions). Provide examples of how the PBM has used data and clinical programs to bend the cost curve for similar employers.

Questions Counsel Should Be Ready to Answer — and Prepare Their Team to Answer

Sponsors, consultants and brokers are likely to arrive with sharper, more specific questions. As counsel, it is important to prepare the account team to have clear, consistent answers. Those questions will range from the basics of compensation — how the PBM is paid and in what amounts — to what portion of manufacturer payments (rebates, fees and other price concessions) actually reduces net plan costs and when those dollars flow.

Sponsors will also probe whether and where the PBM earns spread, the scope and timing of audit rights, the underlying data they can access, and how quickly the PBM can support an audit. In addition, they will look for assurance that formulary design and clinical programs are driven by lowest net cost for the plan, not by revenue opportunities for the PBM or its affiliates, and that they will be able to evaluate fee reasonableness and performance and document that oversight.

If current marketing or training materials do not answer these questions simply and credibly, that is a concrete gap that counsel should work with the business team to address.

Questions to Ask Plan Sponsors

PBMs and intermediaries can also reduce risk and deepen relationships with plan sponsors by asking their own targeted questions. These help PBMs and intermediaries uncover pressure points early and position solutions before a competitor does.

If counsel is not involved in their discussions, answers should be shared with counsel to inform contract negotiations. PBMs should seek to understand how a plan's fiduciary or governance committee currently reviews PBM fees and performance, and what would make that oversight process easier. They should gauge whether the sponsor has a preferred compensation structure or is open to evaluating different models, so long as the underlying economics are transparent.

Inquiring about expected audit activity over the next several years will permit future data access and reporting design to support that level of scrutiny. It is equally important to clarify which performance metrics matter most to the sponsor's leadership: overall trend, specialty spend, member impact or other priorities.

Finally, PBMs should aim to package reporting in ways that plug directly into board or committee materials, minimizing extra work for the sponsor's internal teams. These inquiries signal that the PBM or broker understands the pressures on the sponsor and is willing to align its model and service approach accordingly.

Proactive Steps to Avoid Surprises and Lost Business

Counsel for PBMs, consultants and brokers who want to get ahead of the curve can position their clients for success with these steps.

First, inventory revenue streams and disclosures. Build an internal map of all plan-related compensation and compare it to what is currently disclosed to clients. Identify any categories that are hard to explain or justify; decide whether to simplify, restructure or offer alternatives.

Second, standardize a transparency package. Create a turnkey bundle that includes model disclosures, sample audit language, performance dashboards, and a fiduciary-ready annual report template. Train client-facing teams to use this package consistently across new business and renewals.

Third, create an audit playbook. Define who leads, what data is provided, standard timelines, and how to protect confidentiality. Share a high-level version with clients, so audits feel like a managed process, not a confrontation.

Fourth, refresh the narrative. Reposition messaging away from proprietary savings, and toward transparent, auditable value with aligned incentives. Equip account teams with simple explanations and visuals that make economics and impact easy to grasp for nontechnical stakeholders.

Finally, monitor early warning signs. Treat requests for more detailed data, benchmarking or new audit language as leading indicators of internal pressure. Respond not just with data, but with strategic suggestions — contract tune-ups, new reporting or alternative pricing structures — before someone else offers them.

Conclusion

By treating plan sponsors as partners rather than adversaries, PBMs, PBM consultants and brokers can use the current wave of reforms to strengthen — not just maintain — their relationships.

Leading with transparency, building genuinely win-win economics and embedding meaningful oversight into contracts will help clients meet their fiduciary obligations while reducing litigation risk.

Counsel who guide their organizations in that direction now will keep pace with the federal and state law requirements and position their clients as the partners that plan sponsors actually want.

Originally published on Law360