2024 was a building year for PBM oversight and enforcement in the states. NCPA ramped up its advocacy at the National Association of Insurance Commissioners to positive effect and states demonstrated slow and steady progress towards meaningful regulation of PBMs. This is the 2024 Year in Review for state-level PBM enforcement.
As mentioned in our recap for PBM state legislation, 225 PBM reform bills were introduced in 2024 compared to an average of over 400 in recent years. Aside from reimbursement floors, some states have exhausted legislation on certain PBM issues. In some cases, enacted laws are having varying impacts due to lack of enforcement. Accordingly, PBM enforcement has been a standalone issue within the NCPA strategic plan.
In a win for NCPA’s ongoing state-level regulatory advocacy, NAIC’s PBM Regulatory Issues Working Group adopted its 2024 charges, setting its direction for 2024 and beyond. Among the charges, it will monitor, facilitate, and coordinate with the states and federal agencies regarding PBM compliance and enforcement. In addition, it will draft a new chapter for the NAIC market conduct manual with standards for examinations of PBMs.
NCPA developed a best practices document for PBM enforcement document and continued to engage NAIC Working Group members. NCPA is also working with other pharmacy stakeholders to inform the drafting of standards for examining PBMs.
NCPA continues to advocate for a uniform electronic PBM complaint form for use in all states, the data from which can be aggregated and used to inform enforcement. Our PBM Complaints tool can help you with reporting possible violations to your state insurance regulators and pushing them to enforce the policies on the books.
Even when PBM enforcement is legislated, implementation takes time. Besides being signed into law, appropriations are needed, budgets approved, and appropriate personnel hired (preferably pharmacists).
Legislation that authorizes rulemaking can take even longer. As just a few examples of such rulemaking processes in 2024, the Tennessee Department of Commerce and Insurance advanced robust rulemaking pertaining to enforcement, the Delaware Department of Insurance completed its first PBM examination, and Idaho hired a PBM examiner.
What do departments need to enforce? How many people? With what expertise? Insurance departments are only beginning to find their way on these important questions. In 2024, NCPA continued to advocate at NAIC for the inclusion of PBM-related oversight resources in its annual Insurance Department Resources Report. This would serve as a helpful guide to states with less developed oversight and enforcement schemes.
While NCPA supports PBM oversight and enforcement in the Office of the Insurance Commissioner, there are other approaches in our 50-state laboratory. In 2024, Oklahoma completed the transition of its PBM oversight to the Office of the Attorney General. Meanwhile, Mississippi’s Board of Pharmacy provides PBM oversight, commissioning an audit of Optum in 2024 that provided meaningful insight and data.
The lines of PBM oversight are not always easy to navigate. In some states, the Department of Insurance oversees PBMs in the commercial market, but a different department may oversee managed care plans. This can sometimes result in less direct oversight of PBMs employed by those Medicaid managed care plans. For example, in 2024 the Pennsylvania auditor general found ineffective PBM oversight by the Department of Human Services, just as Illinois’s auditor general found in 2023 about the Department of Healthcare and Family Services.
2024 concluded with NCPA presenting at the NAIC winter meeting in Denver, sharing the pharmacy perspective about PBMs and the relationship between pharmacies and PBMs. As with turnover in state legislatures, the refreshed NAIC PBM Working Group welcomed new members with varying levels of understanding of PBMs. Educating new regulators will be a critical activity in 2025 and beyond.
