Over a dozen state officials rally behind game-changing Trump admin rule cracking down on fraud: ‘Essential’

FIRST ON FOX: Financial officers from 12 states are backing a proposed Department of Labor rule that targets healthcare “middlemen” by demanding more transparency, rallying behind the Trump administration’s waste, fraud, and abuse crackdown as well as the goal of lowering healthcare costs.

In a letter to the Labor Department obtained by Fox News Digital, over a dozen state financial officers in the State Financial Officers Association (SFOF) offered their support of a proposed rule being evaluated by the Labor Department targeting pharmacy benefit managers (PBMs) that would expose hidden fees, conflicts of interest and overcharging that drive up costs.

“Healthcare purchasers are operating in the dark, paying inflated costs because hidden pricing and middlemen obscure where every dollar goes,” OJ Oleka, CEO of the State Financial Officers Foundation, told Fox News Digital. “By bringing those hidden prices into the light, companies can finally identify waste, negotiate better deals, and redirect those savings toward higher wages, more jobs, stronger benefits for workers, and increases to shareholder value.” 

Oleka went on to explain that on a state level, the transparency brought on by the new rule is “essential to safeguarding taxpayer resources and fulfilling fiduciary responsibilities.”

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“Transparency isn’t just about accountability; it’s critical to detecting waste, preventing fraud, and ensuring that healthcare spending delivers value to the workers, businesses, and taxpayers who ultimately bear these costs.”

If implemented, the rule would require full disclosure of these “middlemen” revenue streams, expand beyond pharmacy benefit managers to insurers and third-party administrators, and allow access to claims and pricing data, which SFOF says will be a key tool in combating fraud while outlining in the letter that the administration shouldn’t stop there.

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

“Enforcing price transparency is essential for us to perform our fiduciary duties effectively,” she said. “Greater oversight and accountability for employer-based health plans will help prevent waste, fraud, and abuse in federal healthcare programs, such as the $463.7 million in inappropriate hospital payments my office uncovered in Utah last year. Expanding this rule would help us do our jobs, root out fraud and waste, and reduce the cost of healthcare for all Americans.”

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

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The push follows months of action from the Trump administration and SFOF to crack down on waste, fraud, and abuse across government. Trump recently named Vice President JD Vance the nation’s “fraud czar” to lead an anti-fraud task force, and in February the SFOF uncovered 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 — signed onto the effort.

More than $50 billion annually in undisclosed rebates and fees is retained by top pharmacy benefit managers, which has “prevented effective oversight,” according to the letter. The letter details methods used to generate this hidden fraud.

“Healthcare overcharging in the United States erodes shareholder value by driving up costs for employers (and patients),” the letter states.

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

The letter also states that pharmacy benefit managers are buying more expensive drugs from manufacturers for higher rebates without those incentives ever being disclosed.

“These arrangements are generally not made public, so plan sponsors often do not have insight into how much pharmacy benefit managers are actually paying for drugs on their formularies,” according to the letter.

It adds that pharmacy benefit managers are steering patients away from cheaper pharmacy options to their own affiliated pharmacies to boost profits.

In 2023, U.S. healthcare spending reached nearly $5 trillion, about 17.6% of GDP, while employers spent roughly $1.3 trillion in 2024, with costs rising more than 5% annually, according to the letter.

The letter builds on recent pressure from these same officials on Fortune 500 companies to more closely examine healthcare spending data, signaling a growing investor-driven push for cost transparency.

It also follows a recent SFOF report showing that financial officers prevented $28 billion in waste and abuse in 2025 alone, along with new polling indicating that Americans view fraud as a major driver of rising living costs.