PBM Rebate Pass-Through Guarantees: The Contract Language That Actually Protects You

The Problem With Most PBM Contracts Right Now

Your PBM contract probably has a rebate guarantee. It probably doesn't mean what you think it means.

Under many existing arrangements, plans receive only a portion of manufacturer rebates, with the PBM keeping the rest. Some contracts guarantee only a minimum floor per prescription or per member per month, and the PBM pockets everything negotiated above that floor. You never see it. You never know it existed.

That's not a rebate guarantee. That's a rebate floor with a hidden ceiling that benefits your PBM.

Put a number on it. A 500-employee plan spending $2M a year on pharmacy could be leaving $150K to $300K with its PBM. Not in fees. In rebates it never sees.

What CAA 2026 Actually Requires

Congress moved on this. Sidley Austin LLP confirms that CAA 2026 Section 6702 requires PBMs to remit 100% of rebates, fees, alternative discounts, and other remuneration received from any applicable entity related to drug utilization or drug spending to ERISA-covered plans. All of it. Not a floor. Not a portion.

Timing matters too. According to Jenner & Block, those rebates must be remitted quarterly, no later than 90 days after the close of each quarter. That's a hard deadline, not a suggestion.

There's one carved-out exception. Bona fide service fees, defined as fair-market-value payments for legitimate services, don't have to be passed through. But per RxBenefits, they must be transparent and quantifiable. If your PBM can't describe exactly what service a fee covers and what it costs, that's not a bona fide fee. That's retained revenue with a label on it.

One important timing note. Full pass-through requirements under CAA 2026 are effective for plan years beginning on or after August 3, 2028, or January 1, 2029 for calendar-year plans. You've got a window. Use it to fix your contract before the law requires it.

The Contract Clauses That Matter

Good intentions in a contract don't pay claims. Specific language does. Here's what to look for and demand.

The Pass-Through Model Makes All of This Simpler

There's a cleaner alternative to negotiating every clause above. The pass-through pricing model, as Drug Channels describes, requires the PBM to pass all discounts, rebates, and other revenues to the plan sponsor. The PBM is compensated solely through administrative fees, making prescription costs fully visible to you.

No floor games. No retained spreads. No ambiguity about what "remuneration" means. You pay a known fee for a known service, and every dollar from manufacturers flows to your plan.

The market is moving this direction. PBM CEOs testified to Congress that 98 to 100% of negotiated rebates go to employers. But PSG survey data tells a different story. Only 42% of plan sponsors actually receive 100% of specialty drug rebates. And only 43% of employers receive medical benefit rebates at all, compared to 70% of health plans. Someone's math doesn't add up.

Don't Wait for 2029

HHS, DOL, and Treasury must issue standard reporting formats and rules no later than 18 months after CAA 2026 enactment, per WTW. Regulatory guidance is coming. PBMs know it. They're already preparing their compliance responses.

Your next contract renewal is the pressure point. Demand 100% pass-through language now, audit rights with your chosen firm, quarterly remittance deadlines, and a bona fide fee schedule. The law is catching up to what good contracts have always required.

One mid-market plan discovered $240K in retained rebates during its first independent audit. The PBM had technically complied with the contract. The contract just didn't protect the plan.

If your PBM won't agree to those terms today, that tells you exactly how much they've been keeping.