Employers often rely on brokers and consultants to evaluate PBMs on their behalf. In some cases the PBM under consideration may also have a financial relationship with the advisor. H.R. 7895 is intended to address that conflict through a proposed PBM kickback ban and bring greater transparency to the selection process.

The PBM Kickback Prohibition Act would not prohibit every business relationship between a PBM and a broker. It would restrict payments tied directly or indirectly to referrals, recommendations, RFP access, market checks, contract renewals or the value of plan business. The principle is straightforward: compensation should not influence which PBM an advisor recommends to an employer.

As of July 2, 2026 the bill has been reported by the House Education and Workforce Committee. It has not passed the House and is not law. Even so it gives employers, brokers and PBMs a clear view of where lawmakers believe stronger protections may be needed.

What the Bill Would Prohibit

The legislation would amend ERISA rules governing service provider arrangements. A PBM could not pay direct or indirect compensation to a person or entity for activities connected to winning or keeping plan business. The restriction would focus on the purpose of the payment rather than the label placed on it.

The proposed restriction would apply to compensation tied to:

• Referring or recommending a PBM
• Placing, retaining or renewing a PBM
• Designing or participating in an RFP
• Conducting market checks or evaluations
• Providing access to employer plan business
• Payments based on the volume or value of business

A PBM could not avoid the rule by describing compensation as a consulting fee, marketing allowance, technology fee, sponsorship or administrative payment. If the payment was connected to the employer’s PBM decision it could still be prohibited. The bill is written to examine the substance of the arrangement rather than the name used in the contract.

Payments from a PBM to a broker, consultant or related company would generally be presumed prohibited unless the parties maintained written documentation showing that the payment reflected fair market value for legitimate services. They would also need to show that the payment was not connected to the employer’s PBM selection. That presumption places the burden on the PBM and advisor to demonstrate that the arrangement was proper.

What It Means for Self-Funded Employers

For employers the main benefit is a more transparent PBM selection process. Brokers and consultants would have less incentive to favor a vendor because of compensation received from that vendor. Employers would also have a clearer basis for evaluating whether the recommendation was made in the best interest of the plan.

The bill also reinforces the importance of fiduciary oversight. Employers need to understand who is being paid, how much they are being paid and whether the compensation could affect the advice they receive. That review should extend to payments involving affiliates and other companies connected to the PBM or advisor.

A prohibited payment could create more than a disclosure problem. It could affect whether the PBM contract qualifies for an exemption from ERISA’s prohibited transaction rules. That may create exposure for the plan and the people responsible for approving the arrangement.

Employers may need to:

• Require disclosure of payments involving the PBM, broker and their affiliates
• Obtain written certification that no prohibited compensation is being paid
• Add audit, termination and indemnification protections to PBM contracts
• Review how the broker or consultant is compensated
• Document why the selected PBM is in the best interest of the plan

Some advisory costs may become more visible under this model. A broker that previously received compensation from a PBM may begin charging the employer directly. That does not automatically mean the employer is paying more because the cost may already have been embedded elsewhere in the arrangement.

What It Means for Non-Fiduciary PBMs

The bill could create a meaningful change for PBMs that use broker compensation to gain access to employer business. Payments tied to placement, renewals, preferred vendor status, market checks or RFP participation would become difficult to defend. PBMs that rely heavily on these arrangements may need to rethink how they compete for business.

The legislation reaches beyond traditional commissions. It could also affect payments made through affiliates or arrangements described as data services, consulting, technology support or marketing. A payment routed through another company would not necessarily fall outside the proposed restriction.

PBMs would likely need to examine:

• Referral fees
• Placement and renewal bonuses
• Preferred vendor arrangements
• Conference sponsorships
• Technology and data service payments
• Payments to broker owned or affiliated entities

The bill would not require a PBM to become a fiduciary. It would also leave several PBM revenue sources untouched including spread pricing, retained rebates, formulary payments, specialty pharmacy margins and revenue earned through affiliated companies. Employers should not view the bill as a complete answer to PBM conflicts because it addresses only one part of the procurement process.

What It Means for Fiduciary PBMs

The bill would not create a special exemption for fiduciary PBMs. A PBM that accepts fiduciary responsibility would still be prohibited from paying for referrals, placement or retention. Fiduciary status would not excuse a compensation arrangement that violates the proposed rule.

A fiduciary PBM that relies on disclosed administrative fees and does not compensate brokers for access to plan business should face less disruption. Its main responsibility would be documenting its practices and confirming that no affiliate or business partner is making prohibited payments on its behalf. Clear contract language and written certifications would become even more important.

The legislation may also improve the competitive position of fiduciary PBMs. A market that limits payments tied to placement gives employers more room to evaluate cost, service, clinical performance and contract terms. PBMs should earn business by delivering measurable value and honoring a clear duty to the plan rather than paying for influence over the recommendation.

Fiduciary status should still be verified rather than accepted as a marketing claim. Employers should confirm that the PBM accepts the obligation in writing and that its revenue model supports the promise being made. A fiduciary standard of care has value only when it is reflected in the contract and the compensation structure.

What It Means for Brokers and Consultants

Many brokers already disclose their compensation and put their clients’ interests ahead of vendor relationships. The legislation is more likely to strengthen those firms than disrupt them. Brokers operating under clear compensation models may have an easier time demonstrating that their advice is independent.

The bill is aimed at compensation arrangements that could influence PBM recommendations, evaluations, renewals or contract placement. It should not be read as an indictment of the broker community. The focus is the financial arrangement between the advisor and the PBM rather than the profession itself.

Legitimate work performed for a PBM may still be allowed. The PBM and broker would need records showing what services were performed, why the payment reflected fair market value and why the arrangement had no connection to employer plan business. That standard may become difficult to meet when the same firm is advising employers on which PBM to select.

A direct and fully disclosed compensation model gives employers and brokers a clearer basis for trust. It makes the broker’s role easier to understand and reduces questions about whether vendor payments influenced the recommendation. Brokers that already operate this way should be well positioned if the bill becomes law.

The Bill Has Limits

H.R. 7895 focuses on payments made by PBMs. It does not apply the same restrictions to medical carriers, third party administrators or every other health plan vendor. Similar compensation practices could therefore continue elsewhere in the benefits market.

Employers should examine all vendor relationships rather than assuming that PBM compensation is the only source of potential conflict. The bill also does not replace an employer’s fiduciary process. Plan sponsors must still compare total cost, contract terms, clinical outcomes, data access and all sources of vendor revenue.

The broader message is difficult to ignore. Employers should know who is paying their advisors and whether those payments could influence the advice they receive. The goal is not to blame brokers but to protect the integrity of the procurement process and keep the plan’s interests at the center of the decision.