RxDC Reporting Considerations for Employers in 2026

Question: What are the main data elements employers need to be aware of in the RxDC reporting, and how should employers coordinate with service providers to complete it?

Short Answer: RxDC reporting is now a routine part of the benefits compliance calendar. It is due annually by June 1 to report on the prior calendar year. Employers are typically responsible for collecting and providing to their reporting vendor certain information referred to as the “P2” plan information and “D1” average monthly premium information. Insurance carriers and TPAs impose deadlines as early as March.

General Rule: RxDC Reporting Due Annually by June 1
All employer-sponsored medical plans, whether fully insured or self-insured (and regardless of size or grandfathered status), are subject to the annual prescription drug and health care spending data submission requirements under Section 204 of the Consolidated Appropriations Act, 2021 (“CAA 2021”). These requirements are commonly referred to as the Prescription Drug Data Collection (“RxDC”) report.

The RxDC data submission includes information on the most frequently dispensed and costliest drugs, as well as prescription drug rebate information. One of the key uses of this information is for the government to compile biennial public reports (as required by the CAA) addressing prescription drug pricing trends and the impact of prescription drug costs on premiums and out-of-pocket expenses.

More broadly, CMS states that the RxDC reports are designed to “enhance transparency and shed light on how prescription drugs contribute to the growth of health care spending and the cost of health coverage.” In light of the recent major federal overhaul of PBM practices in CAA 2026 (to take effect in 2029), it is reasonable at this point to assess that the first four rounds of RxDC reporting have provided sufficient data to drive awareness and legislative activity in the prescription drug arena.

• For more details: Federal PBM Reform Finally Arrives

We have now arrived at the fifth round of RxDC reporting, whereby all group health plans must submit the 2025 RxDC report by June 1, 2026. No extensions apply. All plans use the calendar year as the “reference year” for reporting, regardless of ERISA plan year or insurance policy renewal date.

RxDC Reporting in 2026: No Changes This Year
The RxDC Reporting Instructions for the 2025 reference year (completed by June 1, 2026) confirm that there are “no changes” from last year other than “minor non-substantive clarifications”.

Employers Rely Primarily on Insurance Carriers and TPAs for RxDC Reporting
In most cases, employers do not complete the RxDC report because it is completed by their insurance carrier, TPA, and/or PBM (also known as the “reporting entity”). Generally, the D2-D8 data elements (see below) fall squarely within the reporting entity’s domain to obtain and report. However, in some cases the reporting entity does not have access to the other information they need to complete the full filing.

For employers with fully insured medical plans, the insurance carrier is directly responsible for submitting the RxDC report. While the insurance carriers complete the RxDC reporting, carriers may have different requirements and expectations regarding the information needed from the employer to complete reporting on their behalf. Employers should assist by providing any requested information for the RxDC report (typically the P2 and D1 information described below).

For employers with self-insured medical plans (including level funded plans), as with most compliance burdens the technical reporting obligation lies with the employer. However, in most situations employers will rely on their third party administrator (TPA) or pharmacy benefit manager (PBM) to submit the RxDC report—with input from the employer on some of the required data elements similar to the coordination required with a fully insured carrier. This delegation through written agreement is expressly permitted in the RxDC regulations and instructions. Employers with self-insured plans should confirm that their TPA or PBM will be completing the RxDC report as the “reporting entity” for the plan.

Employers Typically Must Provide Information in March/April for Vendors to Complete RxDC Reporting
The pieces that the reporting entity often will request from the employer are the P2 and D1 data elements (see below). Typically, the carrier and/or TPA will reach out to the employer requesting that the employer respond via a web portal with the information needed to complete those components, with a deadline in March or April.

Employers should timely provide such assistance when requested because the vendor may not file on the employer’s behalf if the employer does not meet the vendor’s deadline. In that situation, the employer would need to file on its own, work with another vendor to file on their behalf, or face potential penalties. It appears that failures to comply with the RxDC reporting requirements would fall under the standard IRC §4980D penalty scheme of $100 per day per affected individual for noncompliance.

• Important Note: Failure to timely respond to a carrier, TPA, or PBM request with the applicable plan information may result in the employer being required to submit the RxDC report on their own. The deadline to respond to the vendor is often well in advance of the June 1 filing deadline (e.g., March).

The RxDC Information Reported
For employer-sponsored group health plans, the RxDC report includes the following information:

P2: Group Health Plan Name and Related Information*
D1: Average Monthly Premium*
D2: Spending by Category
D3: Top 50 Most Frequent Brand Drugs
D4: Top 50 Most Costly Drugs
D5: Top 50 Drugs by Spending Increase
D6: Rx Totals
D7: Rx Rebates by Therapeutic Class
D8: Rx Rebates for the Top 25 Drugs
*Carriers and TPAs frequently ask employers to provide and confirm information for the RxDC report.

The P2 RxDC Data: Group Health Plan Name and Related Information
The P2 file includes some basic plan information that the insurance carrier, TPA, or PBM (“reporting
entity”) often will request from the employers:

P2 Column A: Group Health Plan Name
The instructions state to enter the “group health plan name” without further specification. The FAQ most directly addressing this issue simply directs the reporting entity to “identify the group health plan” for these purposes.

• Best Practice: Absent additional guidance clarifying the element, employers should use the ERISA plan name listed in the wrap plan document/SPD and (where applicable) Form 5500.

P2 Column B: Group Health Plan Number
The instructions state to enter “a unique plan number,” which can be “the plan number from your accounting system, the Form 5500 Plan Number (if a Form 5500 is filed for the plan), the plan sponsor EIN (if the plan sponsor only has one plan), or create a new identification number to enumerate the plans in the plan list.”

• Best Practice: Use the ERISA plan number that employers (regardless of plan size) should have in their wrap plan document/SPD and (where applicable) on the Form 5500. For most plans, this is “501”.

P2 Column C: Carve-Out Description
If the reporting entity is only reporting on a portion of the plan benefits, this field is used to reflect the applicable carved out benefit program. The carve-out data field applies where an entity is reporting on a benefit administered or insured by an entity other than the entity administering or insuring the majority of the plan’s other benefits. The permissible entries include pharmacy only, behavioral health only, fertility only, specialty drugs only, hospital only, and other.

• Note: This field was optional prior to last year’s filing. Column C is no longer optional for reporting entities such as separate PBMs that are reporting for a benefit that qualifies as a carve-out.

P2 Column D: Form 5500 Plan Number
For employers that submit a Form 5500, use the three-digit plan number reported on the Form 5500. For most plans, this is “501” (confirm in the wrap plan document/SPD). All health and welfare plans with at least 100 covered participants on the first day of the plan year must submit a Form 5500.

• Note: The instructions direct small employers that do not complete the Form 5500 to leave this field blank—even though they should still have an ERISA plan number listed in the wrap plan document/SPD.

P2 Column E: States in Which the Plan is Offered
The instructions state to use the two-character state postal code for each state in which the plan is offered. If the plan is offered in every state and in DC, enter “National”.

P2 Column F: Market Segment
This item looks to the size and funding arrangement for the plan:

• Small group market: Fully insured plans offered by employers with 50 or fewer employees

• Large group market: Fully insured plans offered by employers with more than 50 employees

• SF small employer plans: Self-insured plans (including level funded) offered by employers with 50 or fewer employees

• SF large employer plans: Self-insured plans (including level funded) offered by employers with more than 50 employees

P2 Column G-H: Plan Year Beginning Date and Plan Year End Date
The instructions state the plan year may be “the year in the plan document of a group health plan, the deductible or limit year used under the plan, or the policy year.”

• Best Practice: Use the ERISA plan year listed in the wrap plan document/SPD and the Form 5500.

P2 Column I: Members as of 12/31 of the Reference Year
The instructions state to include all persons covered, including employees, spouses, domestic partners, children, COBRA participants, and any other category of covered dependents.

P2 Column J: Plan Sponsor Name
This is the employer for standard plans. If the employer is a controlled group of entities that participate in the same plan, the entry here will be the entity sponsoring the plan, as listed in the ERISA wrap plan document/SPD.

P2 Column K: Plan Sponsor EIN
This is the employer’s EIN for standard plans. This will be listed in the ERISA wrap plan document/SPD and (where applicable) Form 5500.

The D1 RxDC Data: Average Monthly Premium
The D1 file includes a number of data elements, but the component that reporting entities (insurance carrier, TPA, and/or PBM) generally will require that the employer provide is the plan’s average monthly premiums:

D1 Column E-F: Average Monthly Premium Paid by Members and Employers
The monthly average premium is now determined on a per member basis for the total monthly amounts, which means dividing the annual premiums by 12 (instead of the prior approach which required dividing by “member months”).

For the average member premium amount, the instructions state to report the average monthly premium (or premium equivalents) paid by members in the medical plan in the reference year (prior calendar year). This is now done by taking the total annual premium (or premium equivalents) paid by members (i.e., excluding the amount paid by employers) during the reference year and dividing the result by 12. “Members” include all persons covered by the plan (e.g., employees, spouses, domestic partners, children). Amounts paid by the employer are excluded for this purpose.

For the average employer premium amount, the calculation is the total annual premium (or premium equivalents) paid on behalf of members for the medical plan in the reference year (prior calendar year) divided by 12. Amounts paid by members (i.e., the employee-share of the premium) are excluded for this purpose.

If the plan is self-insured, the total premium paid by employers is the total premium equivalents (total plan cost) minus the premium paid by members. Premium equivalents include claims costs, admin fees, stop-loss premium, network access fees, and payments made under capitation contracts. They do not include stop-loss reimbursements, retained prescription drug rebates, or amounts related to FSA/HSA/HRA contributions.

Example of Average Monthly Premium Calculation

Useful RxDC Reporting Resources
CMS maintains a useful library of materials to assist in the reporting process:

• RxDC Primary Website

• RxDC Reporting Instructions

• RxDC P2/D1 Data Elements Slide Summary

• RxDC FAQ List

• RxDC Training Materials Compilation

Summary
While CAA 2021 compliance has mostly reached the point of routine standard practice at this point, employers should remain diligent each year to ensure that they a) confirm their vendors will complete the RxDC reporting on their behalf, and b) meet the vendor-imposed earlier deadline (typically March or April) to provide any required information for the vendor to complete the reporting (typically the P2/D1 information described above).

Disclaimer: The intent of this analysis is to provide the recipient with general information regarding the status of, and/or potential concerns related to, the recipient’s current employee benefits issues. This analysis does not necessarily fully address the recipient’s specific issue, and it should not be construed as, nor is it intended to provide, legal advice. Furthermore, this message does not establish an attorney-client relationship. Questions regarding specific issues should be addressed to the person(s) who provide legal advice to the recipient regarding employee benefits issues (e.g., the recipient’s general counsel or an attorney hired by the recipient who specializes in employee benefits law).