Earlier this year, California Senator Scott Wiener (D-San Francisco) introduced SB 966 that would require PBMs doing business in California to be licensed and regulated. The objective is to curb PBMs anticompetitive practices  contributing to rising drug costs. The press release calls the effort “the most comprehensive regulation of PBMs yet attempted by any state.”

In 2022, drug spending in California grew by 12%–much faster than the overall rate of inflation–while total health premiums rose by just 4%. Last year, more than half of Californians either skipped or postponed mental and physical healthcare due to cost, putting their safety and wellbeing at risk.” 

The three largest PBMs in California (and nationally) are CVS Caremark (operated by Aetna CVS Health), Express Scripts (Cigna), and OptumRx (UnitedHealth Group). Their market power allows them to generate significant profits with very little transparency. Some of the abusive practices that PBMs often engage are:

            – spread pricing;

            – steering patients to more profitable and higher-priced branded medications;

            – steering patients to PBM owned mail order and specialty pharmacies;

– engaging in other anticompetitive practices, such as aggressive pharmacy audits and unsubstantiated fraud investigations against independent pharmacies.

Most of the states – aware of such practices – have enacted some sort of PBM regulations. For example: about 15 states ban spread pricing and 25 states require PBMs to be licensed by state boards of pharmacy. For further information on national PBM legislation by state, see National Academy for State Health Policy’s report.

California, however, has less stringent requirements for PBMs operations. It requires PBMs to be registered (not licensed) with the Department of Managed Healthcare and has legal requirements on PBM audits of pharmacies. In addition, effective January 1, 2024, California now has a law prohibiting PBMs from discriminating against 340b entities (which I plan to cover in my next blog post).

Now –  if enacted – SB 966 would require PBMs to be licensed and to disclose basic information regarding their practices. Other pro-consumer requirements are:

            – anti patient-steering provisions;

            – no spread pricing;

            – passing all negotiated drug rebates to the payor or patients;

            – no exclusive deals with the manufacturers;

            – transparency in fee charged to the plans.

For the complete text of SB 966, visit LegInfo.

Current status:

On April 15, 2024, the Bill passed but was referred to the Committee on Health.

On April 24, 2024, the Bill was amended and referred to the Committee on Appropriations.

Source: Digital Democracy CalMatters

The Bill is definitely making its way through the California legislature and has many supporters determined to codify it.

The California Pharmacists Association has expressed strong support for the bill and conducted a series of events to raise awareness among pharmacy owners and patients. It has a webpage that could be forwarded to the patients and other interested individuals to support the bill.

It has also provided information and flyers to educate pharmacy patients regarding PBM practices and how to voice their support for the Bill.  For more information and to request such materials, please contact CPhA.

While it is very possible that the Bill, as written, will be heavily amended due to some of the requirements; if it passes, California is likely to be the next state that takes PBM abusive practices seriously. Let’s make it happen.