To amend the Employee Retirement Income Security Act of 1974 to ensure that pharmacy benefit managers are considered fiduciaries, and for other purposes.
- Bill Number
- H.R. 6837
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Health
- Status
- Introduced
- Latest Action
- 2025-12-18: Referred to the House Committee on Education and Workforce.
- Last Updated
- 2026-01-26T13:57:30Z
AI-Generated Summary
Purpose
This bill, H.R. 6837, aims to amend the Employee Retirement Income Security Act of 1974 (ERISA—a federal law that sets standards for private employer-sponsored benefit plans, including health plans) to classify pharmacy benefit managers (PBMs—companies that manage prescription drug benefits for health plans) as fiduciaries. Fiduciaries are parties legally required to act solely in the best interest of the plan and its participants. The goal is to increase accountability, transparency, and protections for group health plans by ensuring PBMs prioritize plan interests over their own profits.
Key Provisions
- Fiduciary Status for PBMs: PBMs are automatically considered fiduciaries under ERISA if they:
- Maintain a network of prescription drug providers (like pharmacies) or a formulary (a list of approved drugs) for group health plans, sponsors, administrators, or insurers.
- Negotiate or aggregate rebates, fees, discounts, or other price concessions for prescription drugs.
- Process and pay claims for prescription drugs.
- Perform utilization review and management (evaluating the necessity and appropriateness of drug prescriptions) for group health plans.
- Compensation Disclosure Requirements: PBMs and third-party administrators (entities that handle plan administration) must disclose all direct and indirect compensation (e.g., fees, rebates) related to services like establishing drug networks, formularies, claim processing, record-keeping, or negotiating provider rates.
- Limits on Responsible Fiduciary Role: Service providers (including PBMs) cannot serve as the "responsible plan fiduciary" for approving their own disclosures, except when a PBM sponsors its own employee health plan.
- Ban on Indemnification: PBMs deemed fiduciaries cannot be protected (indemnified) from liability for breaching their duties; any contract clause attempting this is void as against public policy.
- Effective Date: Changes apply to plan years starting at least 12 months after enactment.
- Technical Update: Minor wording fix to ERISA for clarity.
Significant Changes to Existing Law
- Expands ERISA's fiduciary definition (Section 3(21)) to explicitly include PBM activities, which were previously not always treated as fiduciary roles, potentially allowing PBMs more flexibility in decision-making.
- Adds new disclosure rules for PBM and third-party admin compensation under ERISA Section 408(b)(2), building on existing requirements but targeting drug-related services specifically.
- Introduces prohibitions on indemnification for these fiduciaries (under ERISA Section 410), closing loopholes that might have shielded them from accountability.
- Clarifies fiduciary responsibilities in disclosures, preventing conflicts of interest.
Potential Impacts
- On Government Agencies: The Department of Labor (which enforces ERISA) may see increased oversight and enforcement duties, including reviewing disclosures and investigating breaches, potentially straining resources but improving regulatory effectiveness.
- On Citizens: Employees and beneficiaries in employer-sponsored group health plans could benefit from lower drug costs and better access if PBMs act more transparently and in plan interests, reducing practices like hidden rebates that inflate prices.
- On International Relations: Minimal direct impact, though it could indirectly affect U.S. pharmaceutical trade by pressuring drug pricing negotiations involving global manufacturers.
- Broader effects include higher compliance costs for plans and PBMs, possibly leading to more litigation over fiduciary breaches, but fostering trust in the health benefits system.
Main Stakeholders Affected
- Pharmacy Benefit Managers (PBMs): Face new fiduciary duties, disclosure mandates, and liability risks, requiring operational changes to prioritize plan interests.
- Group Health Plan Sponsors and Administrators: Employers or unions running plans gain tools for oversight but must review and act on disclosures.
- Health Insurance Issuers: Affected if they use PBMs for drug benefits, with potential ripple effects on premiums and coverage design.
- Plan Participants (Employees and Beneficiaries): Indirectly benefit from enhanced protections against self-interested PBM practices.
- Drug Manufacturers, Distributors, and Wholesalers: May see altered rebate and pricing negotiations due to increased transparency.
- Third-Party Administrators: Subject to new disclosure rules for health-related services.
Notable Legal, Constitutional, or Political Implications
- Legal: Strengthens ERISA's fiduciary standards, potentially increasing lawsuits for breaches (e.g., if PBMs favor profits over plan savings), but provides clearer guidelines to reduce ambiguity in drug benefit management. The voiding of indemnification clauses reinforces public policy against waiving core protections.
- Constitutional: No direct challenges anticipated, as it operates within Congress's authority to regulate interstate commerce and employee benefits; aligns with due process by imposing duties on private entities without retroactive application.
- Political: Addresses growing concerns over opaque PBM practices and high drug costs, appealing to bipartisan efforts for healthcare affordability. Could spark industry pushback from PBMs (e.g., CVS Caremark, Express Scripts) but support from consumer advocates and labor groups; may influence future reforms in pharmaceutical pricing.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. Auchincloss, Jake [D-MA-4]
Cosponsors (1)
Recent Actions
- 2025-12-18: Referred to the House Committee on Education and Workforce.
- 2025-12-18: Introduced in House
- 2025-12-18: Introduced in House
Bill Versions
- To amend the Employee Retirement Income Security Act of 1974 to ensure that pharmacy benefit managers are considered fiduciaries, and for other purposes. — issued 2025-12-18 — PDF (5 pages)