PBM Reform
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 regularly updated PBM 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:
Key Issues
PBM regulation enforcement:
NCPA Best Practices for PBM Enforcement
NAIC comments on draft guidelines for PBM licensure
Addressing the cost of PBM reform:
NAIC PBM White Paper Comments June 2023
NAIC Draft White Paper April 2023
Meaningful PBM Reform Does Not Raise Costs
Controlling PBM Conflicts of Interest Does Not Raise Healthcare Costs
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.
Is Your State Enforcing PBM Regulations?
No? You must file complaints with your state department of insurance. Here’s how.
State Specific Community Pharmacy Impact Sheets
For more information about state PBM reform, please contact Joel Kurzman.
Prescription Drug Affordability Boards
In recent years, states have established prescription drug affordability boards (PDABs) to address concerns with prescription drug costs. PDABs select medicines for review and determine whether specific products present an affordability challenge within the state. Some PDABs also can establish an upper payment limit (UPL) for medicines found to be unaffordable.
Policies like UPLs do not offer a roadmap to the PBM reforms that are so sorely needed. Instead, they reward large and PBM/insurer-owned pharmacies with levers to pull that community pharmacies lack.