Drug price reform: 5 state-level bills and their potential national impacts
- IPMD
- Jun 18
- 3 min read
Reporter: Wes Hill
Whether it is regulating pharmaceutical manufacturers, health insurers, or pharmacy benefits managers, so-called market reform has been an on-again-off-again topic of debate in Washington for years. And yet, bogged down by partisan divides and pharma manufacturer lobbying, the federal government has made little progress.
States across the U.S. are no longer waiting for Washington to lead the way. Red states and blue alike have been considering a range of legislative proposals they believe will help reign in ongoing prescription drug price inflation.
Other Recommended Articles on BenefitsPro:
Whether these efforts will bring about positive change or only prove to be burdensome depends on each stakeholder’s perspective; however, one thing is clear: if passed, many of these bills could be precedent-setting, ripple across the country, and impact plan sponsors.
Here, we look at five notable state-level bills currently under consideration and their potential impacts.
Divesting PBMs from retail pharmacies (Arkansas)
Arkansas House Bill (HB) 1150, which recently became law, seeks to redefine the relationship between PBMs, health care payers, and the pharmacies they work with. The bill prohibits PBMs and health care payers from directly or indirectly owning retail pharmacies licensed in Arkansas. Similar bills have been introduced in Indiana, New York, and Texas, but so far, HB 1150 has gained the most traction.
Why it matters
This bill attempts to address concerns lawmakers position as conflicts of interest and anti-competitive practices and promote a more “transparent and fair playing field” for independent pharmacies. Vertical integration has been a hot topic at the federal level as well, and has been cited by the Federal Trade Commission and the House Committee on Oversight and Reform as an area of concern.
If passed into law, the bill will take effect January 1, 2026, but is likely to face significant legal challenges from vertically integrated PBMs that operate retail pharmacies in the state. However, it could serve as a litmus test for similar legislation across the U.S.
Requiring rebate pass-through (California)
California’s Senate Bill (SB) 41 is an updated version of a previous PBM reform bill vetoed by Governor Gavin Newsom. This time, the bill has stronger provisions addressing transparency, rebate practices and network management. It requires 100% of rebates to be passed through “to the health care service plan, health insurer, or program.” The stated goal is to reduce premiums or offset cost-sharing, and to achieve this, it mandates reporting on PBM compensation and relationships with group purchasing organizations. It also introduces strict requirements for PBMs operating in the state, such as prohibiting steering to affiliated pharmacies and ensuring reimbursement parity for any willing pharmacy networks.
Why it matters
By mandating full rebate pass-through and requiring “any willing provider” inclusion in pharmacy networks, SB 41 challenges some of the industry’s most entrenched practices. Given the sweeping nature of the provisions in this bill, it has the potential to have broad implications for the PBM landscape and could pave the way for wider adoption of similar reforms in other states.
Mandating minimum reimbursements for pharmacies (Illinois)
Illinois HB 3705 is a multi-faceted bill that looks to tackle a breadth of elements, including transparency, fair compensation for pharmacies, and what state lawmakers term anti-competitive practices by PBMs. It introduces a mandated minimum reimbursement of national average drug acquisition cost (NADAC) plus $15.55 for critical access pharmacies, with a stated policy goal of ensuring they remain viable in underserved areas.... CONTINUE READING
Comments