Trump Order Risks Triggering Lawsuits Over Drug Consulting Fees

President Donald Trump’s executive order targeting fees in the prescription drug supply chain sets up a legal fight with the industry even as it attempts to unearth long-hidden costs that are already the subject of a variety of lawsuits.

The order signed Tuesday instructs the Labor Department to propose within 180 days regulations that would improve “employer health plan fiduciary transparency into the direct and indirect compensation received by pharmacy benefit managers,” which oversee the prescription drug benefit for health insurance companies.

An accompanying fact sheet said the order targets “middlemen” by improving disclosure of fees PBMs “pay to brokers for steering employers to utilize their services.”

The broad directive is further evidence of new scrutiny on the role of health insurance consultants, whose fees are often hidden from employers and the public. It also builds on the Consolidated Appropriations Act of 2021, which amended the Employee Retirement Income Security Act to require that employers ensure all compensation to third-party service providers is “reasonable.”

“It’s clear that this executive order is aimed at getting access to all the fees paid to the PBMs and paid by the PBMs to brokers and consultants,” said Anne Tyler Hall, managing partner at Hall Benefits Law. “Both directions.”

Any move to increase data disclosure requirements could spur litigation, especially after the US Supreme Court struck down the longstanding doctrine of Chevron deference. Loper Bright Enterprises v. Raimondo in 2024 eliminated the requirement that judges cede to federal agencies’ interpretations of ambiguous or silent statutes.

The industry could challenge any rule that reinterprets ERISA as exceeding the department’s authority under the Administrative Procedure Act and the new Loper Bright paradigm. PBMs are not explicitly mentioned as covered third-party service providers in the statute.

“There’s been some question about who exactly falls within that definition,” said Lisa Gomez, who led the DOL’s Employee Benefits Security Administration under former President Joe Biden.

Some already expect legal challenges from PBMs and consultants who help them secure clients.

“If the administration is as aggressive as they appear to be, I would expect immediate lawsuits by affected industries that are unhappy,” said Shawn Gremminger, president and CEO of employer group National Alliance of Healthcare Purchaser Coalitions. “And I would expect them to get tied up in court.”

Lawsuits

Industry group the Pharmaceutical Care Management Association said PBMs already take steps to reduce costs for plan participants by offering employers different business models and pressuring the pharmaceutical industry to lower prices.

PBMs “continue to share the administration’s goal of lowering prescription drug costs for the American people and reducing health care premiums for America’s seniors,” the group said in a statement.

PCMA sued the first Trump administration over its now-defunct rule to eliminate backdoor rebates to insurers, as well as a rule forcing disclosure of rebate and pricing information. The group settled with the Biden administration in 2021 on the second rule.

PCMA has also been challenging state laws that target the PBM industry in the wake of its 2020 Supreme Court loss over an Arkansas law regulating pharmacy payments. The group is waiting to hear whether the high court will consider a US Court of Appeals for the Tenth Circuit’s decision overturning an Oklahoma law regulating pharmacy networks.

Many states have laws regulating PBMs, including 27 requiring they report drug rebate data.

Groups like The ERISA Industry Committee and a Teamsters health benefits plan also sued over PBM laws in Minnesota and Arkansas.

Workers are initiating their own wave of litigation over PBMs. Johnson & Johnson and Wells Fargo recently beat lawsuits from employees over high drug costs in their PBM contracts, while JPMorgan is facing a similar challenge. A former Evolution Healthcare executive also sued the consultant firm in February, alleging he was fired for sharing the amount of drug rebates Evolution receives from its PBM clients.

Potential Paths

The DOL typically focuses on employers, not PBMs and brokers. But the department could try to clarify a number of ERISA’s gray areas on its own, Gomez said.

The law explicitly lists a number of covered third-party services that PBMs perform—such as actuarial, auditing, and recordkeeping activities—that give the department some wiggle room in drafting a rule.

“I don’t think it would be outside of their authority to interpret the statute to include PBMs and other types of service providers within any of those categories,” she said.

Gremminger said DOL could separately flesh out the list of covered duties that create a “fiduciary” under ERISA to include all the decisions that PBMs make on a daily basis, like a drug’s classification and access requirements.

“At that point, the PBMs either have to stop doing those things and check in with their plan sponsors every day, or they have to just accept the reality that they are plan fiduciaries and they have to have the best interest of the health plan,” he said.

Lawmakers came close to addressing PBM and broker fees in December’s year-end spending bill, before backlash to the legislation’s broader price tag from the incoming Trump administration.

Trump’s DOL officials have also expressed interest in increasing PBM transparency. Labor Secretary Lori Chavez-DeRemer sponsored a bill to improve employer access to claims data during her time in Congress. Daniel Aronowitz, Trump’s nominee to run EBSA, criticized PBMs’ business models as workers sue employers over high costs and hidden fees.

The safest approach would be for Congress to explicitly add PBMs as covered service providers under ERISA, given the open legal questions, Gomez said.

PBMs often insist on contract provisions that explicitly exclude them from the fiduciary label, which pose another legal hurdle for plaintiffs and employers. But those contracts are not necessarily a bulletproof defense, she said.

“If you’re blue, then you can’t in a contract say, everyone agrees that I’m green,” Gomez said. “You’re blue.”

Employers share that responsibility too, she added.

“They were green,” she said. “Why did you sign off and agree that they were blue?”