Pharmacy benefit managers were created as middlemen to reduce administrative costs for insurers, validate a patient’s eligibility, administer plan benefits, and negotiate costs between pharmacies and health plans. Over time, PBMs have been allowed to operate virtually unchecked as they consolidated to where three companies now control 80% of the prescription drug market.
Vertical integration and a lack of transparency have led many states to enact PBM laws to address egregious business practices and level the playing field for pharmacies and patients. PBMs found ways to circumvent much of this early legislation, prompting states to revisit laws and add greater oversight and enforcement through state Departments of Insurance.
Follow NCPA’s current effort to regulate PBMs in our 2023 legislative tracking report. Please check out our resources on some of today’s most challenging state-level PBM issues.
NCPA letters of support
NCPA advocates for state legislation that includes elements of our model outline. Recent NCPA letters of support include:
Addressing the cost of PBM reform:
Addressing ERISA/employer-based plans:
In the wake of Rutledge v. PCMA, PBM reform is not pre-empted by ERISA.
PBMs tried to challenge PBM regulation in PCMA vs. Wehbi, but SCOTUS confirmed that states can regulate PBMs.
For more information, please visit our Legal Center.