To amend the Employee Retirement Income Security Act of 1974 to ensure that pharmacy benefit managers are considered fiduciaries, and for other purposes.
- Sponsor
- Rep. Auchincloss, Jake [D-MA-4]
- Committees
- Education and Workforce Committee (primary)
- Last action
- Dec 18, 2025
Bottom line
H.R. 6837 seeks to increase transparency and accountability in the prescription drug supply chain by subjecting PBMs to ERISA's fiduciary standards and requiring detailed compensation disclosures, potentially shifting liability and operational practices for these entities.
What it actually does
This bill amends the Employee Retirement Income Security Act of 1974 (ERISA) to explicitly deem pharmacy benefit managers (PBMs) as fiduciaries when they manage prescription drug networks, formularies, or negotiate rebates for group health plans. It also mandates enhanced compensation disclosures from PBMs and third-party administrators (TPAs) and prohibits PBMs from being indemnified for breaches of their new fiduciary duties. The bill aims to increase transparency and accountability in the PBM industry.
Proponents argue
Proponents argue that PBMs currently operate with insufficient oversight, leading to opaque pricing practices and conflicts of interest that drive up prescription drug costs for employer-sponsored health plans and their beneficiaries. By establishing PBMs as fiduciaries, this bill would ensure they act solely in the best interest of the plans they serve, fostering greater transparency, accountability, and ultimately leading to lower drug costs.
Opponents contend
Opponents, primarily PBM industry groups, contend that these changes could disrupt existing market dynamics, increase administrative burdens and operational costs for PBMs, and potentially lead to higher prices for plan sponsors or reduced access to services. They argue that PBMs already deliver significant savings and that increased regulation could stifle innovation and competition within the industry.
The bill text is short and concise, making it accessible for a quick read. However, understanding its full implications requires familiarity with ERISA and the complex PBM industry, necessitating more time for a thorough evaluation.
Section 1(a)
Deeming Pharmacy Benefit Managers as ERISA Fiduciaries
This provision amends Section 3(21) of ERISA to explicitly classify a person or entity as a fiduciary if they maintain a prescription drug provider network or formulary, or engage in negotiation of rebates, processing of claims, or utilization review for a group health plan. This means PBMs performing these functions would be legally obligated to act in the best interest of the plan and its beneficiaries.
Supporters argue
Supporters argue that this change is essential to eliminate conflicts of interest within the PBM industry, ensuring that PBMs prioritize the financial well-being of health plans and their beneficiaries over their own profits. This is expected to drive down prescription drug costs.
Critics contend
Opponents contend that imposing fiduciary status on PBMs could lead to increased operational costs, potential litigation, and may force PBMs to alter their business models, which could ultimately result in higher administrative fees or reduced service offerings for plans.
Tradeoffs
The provision balances the desire for increased PBM accountability and transparency with concerns about potential market disruption, increased costs for PBMs, and the complexity of applying traditional ERISA fiduciary standards to PBM business practices.
Section 1(b)
Required Compensation Disclosures from PBMs and TPAs
This section amends ERISA to require PBMs and Third Party Administrators (TPAs) to disclose all direct and indirect compensation they, their affiliates, or subcontractors expect to receive for services provided to covered plans. This includes compensation related to establishing drug networks, formularies, purchasing drugs, processing claims, maintaining medical provider networks, and negotiating reimbursement rates.
Section 1(c)
Clarification of Responsible Plan Fiduciary for Disclosures
This provision clarifies that a covered service provider, such as a PBM, cannot serve as the 'responsible plan fiduciary' for the purpose of overseeing its own required disclosures. An exception is made for a PBM that sponsors a covered plan for its own employees, in which case it may be considered the responsible plan fiduciary for that specific plan.
Section 1(d)
Prohibition on Indemnification for PBM Fiduciary Breaches
This section amends ERISA to prohibit any person or entity deemed a fiduciary under the new PBM fiduciary definition from being indemnified or otherwise relieved from liability for breaches of their fiduciary duties. Any contractual provision attempting to provide such indemnification would be void as against public policy.
Section 1(f)
Delayed Effective Date
This section specifies that the amendments made by the bill will apply to plan years beginning at least 12 months after the date the Act is enacted. This provides a transition period for affected entities to comply with the new requirements.
The specific activities that trigger fiduciary status for PBMs, including maintaining drug networks/formularies, purchasing drugs from various entities (manufacturers, wholesalers, rebate aggregators), negotiating rebates, processing claims, and performing utilization review.
Section 1(a)(C)(i) and (ii)
Why it matters:This is standard legislative practice for defining the scope of a new legal classification within existing statute, ensuring precision and legal enforceability.
Case for: Supporters argue that clearly delineating these activities ensures comprehensive coverage of PBM functions that directly impact plan costs and beneficiary access, leaving no room for PBMs to avoid fiduciary responsibility through narrow interpretations.
Case against: Opponents might argue that the broad scope of these triggers could inadvertently capture activities that are purely administrative or contractual, potentially over-regulating PBM functions that do not inherently involve fiduciary decision-making.
Estimated impact: This detailed enumeration significantly broadens the scope of PBM activities subject to ERISA fiduciary standards, impacting virtually all PBM operations related to group health plans.
A technical amendment correcting a cross-reference in Section 408(b)(2)(B)(i) of ERISA from 'this clause' to 'this subparagraph'.
Section 1(e)
Why it matters:This is standard legislative practice for maintaining internal consistency and accuracy within complex statutes like ERISA. It's a necessary cleanup, not an attempt to hide policy.
Case for: Ensures the legal accuracy and proper interpretation of ERISA's disclosure requirements, preventing potential ambiguities or unintended legal consequences.
Case against: No specific opposition, as technical amendments are generally non-controversial and aimed at improving statutory clarity.
Estimated impact: No direct policy or fiscal impact; solely ensures legal clarity and consistency within the statute.