12 states reinstates the Department of Labor’s rule to disclose pharmacy benefit manager fees

FIRST ON FOX: Finance officials from 12 states are backing a proposed Labor Department law targeting “middlemen” in health care by demanding more transparency, supporting the Trump administration’s waste, fraud and abuse and the goal of lowering health care costs.

In a letter to the Department of Labor obtained by Fox News Digital, more than a dozen state financial officers from the State Financial Officers Association (SFOF) have given their support to a proposed rule being examined by the Department of Labor aimed at pharmacy benefit managers (PBMs) that would disclose, and overcharge, those cost increases.

“Healthcare consumers are working in the dark, paying inflated costs because prices are hidden and vendors are hiding where each dollar goes,” said OJ Oleka, CEO of the State Financial Officers Foundation, told Fox News Digital. “By bringing those hidden costs to light, companies can finally identify waste, negotiate better deals, and redirect those savings into higher wages, more jobs, stronger employee benefits, and increased shareholder value.”

Oleka went on to explain that at the federal level, the transparency brought about by the new law is “essential to protecting taxpayers’ resources and fulfilling fiduciary obligations.”

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“Transparency isn’t just about accountability; it’s about finding waste, preventing fraud, and ensuring that health care provides value to workers, businesses, and the taxpayers who end up bearing these costs.”

If done, the law will require the full disclosure of this flow of “middlemen”, extending beyond pharmacy benefit managers to insurers and third-party managers, and allowing access to claims and pricing data, SFOF says will be an important tool in the fight against fraud while explaining in the letter that managers should not stop there.

“As guardians of billions of hard-earned taxpayer dollars, we support the Department of Labor’s proposed rule and hope the administration will move forward,” Tina Cannon, Utah’s state auditor, told Fox News Digital.

“Enforcing price transparency is important to do our honest duty properly,” he said. “Greater oversight and accountability of employer-based health plans will help prevent waste, fraud, and abuse in federal health care systems, like the $463.7 million in improper hospital payments my office uncovered in Utah last year. Expanding this law will help us do our jobs, eliminate fraud and waste, and reduce health care costs for all Americans.”

A “complex web” of hidden discounts, fees, and incentives, run by pharmacy benefit managers, allowed the fraud to go undetected for years, according to the letter.

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The campaign follows months of action by the Trump administration and SFOF to crack down on waste, fraud, and abuse across the government. Trump recently named Vice President JD Vance as the nation’s “fake governor” to lead an anti-fraud task force, and in February the SFOF exposed billions in taxpayer waste.

Treasurers and auditors from 12 states — including Nebraska, Louisiana, Wyoming, Pennsylvania, West Virginia, North Dakota, Indiana, Oklahoma, South Carolina, Utah, Mississippi and Kansas — have signed on to the effort.

More than $50 billion a year in undisclosed rebates and fees are kept by senior pharmacy benefit managers, “preventing effective oversight,” according to the letter. The book details the methods used to carry out this hidden fraud.

“Overcharging for health care in the United States reduces shareholder value by increasing costs to employers (and patients),” the letter said.

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Vice President JD Vance called the first meeting of a new anti-fraud task force, accusing the Biden administration of weakening longstanding protections. (Heather Diehl/Getty Images)

Another major concern is that pharmacy benefit managers charge more for a drug than they pay the dispensing pharmacy “to keep the difference or ‘distribute’ as a profit.” In turn, hidden money from regulators drives up prices.

The letter also claims that the benefit managers of the pharmacy buy the most expensive drugs from the manufacturers in order to get more discounts without those benefits being disclosed.

“These arrangements are not disclosed, so plan sponsors often have no idea how much pharmacy benefit managers actually pay for the drugs in their products,” according to the letter.

It adds that pharmacy benefit managers steer patients away from cheaper pharmacy options to their affiliated pharmacies to maximize profits.

In 2023, health care costs in the US reached about $5 trillion, about 17.6 percent of GDP, while employers spent about $1.3 trillion in 2024, with costs increasing by more than five percent a year, according to the book.

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The book builds on it recent stress from these same executives at Fortune 500 companies to comprehensively examine health care cost data, showing growth driven by investors for cost transparency.

It also follows SFOF’s latest report showing that financial officials have prevented $28 billion in waste and abuse by 2025 alone, and new polling that shows Americans view fraud as the biggest driver of cost-of-living increases.