What Are Other States Doing?

In December 2021, the New York Legislature passed Senate Bill S3762 and Governor Kathy Hochul later signed it into law. In an effort to regulate PBMs, the legislation:

• Requires pharmacy benefit managers in New York to register and obtain licenses with the state insurance department and adhere to state regulations on the duties and obligations of PBMs
• Gives the Department of Financial Services (DFS) authority to receive complaints from consumers, pharmacies, and healthcare providers and enforce the law by revoking PBMs’ licenses and issuing penalties for violations

Governor Hochul then created a new, first in the nation, Pharmacy Benefits Bureau in May 2022. To supervise PBMs, the bureau will:

• Direct DFS as they establish standards to enforce the new law, with a focus on protecting consumers and independent small businesses
• Handle licensing of PBMs
• Supervise the PBM industry in relation to its impact on patients and the cost of health care

Through House Bill 166, which was passed by the Ohio Legislature and signed by Governor Mike DeWine in 2019, a single pharmacy benefit manager system was established. It launched on October 1, 2022 and is managed by the Ohio Department of Medicaid. 

The legislation’s regulations on PBMs include: 

• Establishing a new single PBM (SPBM) system which:
  • Increases patient choice and access to pharmacies
  • Bases pharmacy rates on actual costs pharmacies incur
  • Prohibits patient steering
  • Provides transparency of any financial benefits such as rebates
• Requiring centralized credentialing and provider enrollment through a new provider management program
• Creating the Prescription Drug Transparency and Affordability Advisory Council
• Prohibiting reimbursement clawbacks and PBM gag clauses

With Act 169 passed in 2016, HB 941 passed in 2020, and HB 1630 passed in 2022, the Pennsylvania Legislature enacted significant PBM reforms.

Collectively these bills regulate PBMs by:

• Requiring PBMs to register with the Pennsylvania Insurance Department
• Improving transparency in the establishment and management of multiple source generic lists to pharmacies
• Prohibiting PBMs from arbitrarily excluding pharmacies from network participation
• Restricting PBMs from denying or reducing claim reimbursements retroactively
• Preventing PBMs from charging hidden fees
• Prohibiting patient-steering and spread pricing
• Providing the Pennsylvania Auditor General authority to audit subcontracts with PBMs serving Medicaid managed care organizations

In 2022, Michigan passed three laws that intend to control prescription drug costs and limit PBMs.

These three bills collectively:

• Prohibit spread pricing, gag-clauses, co-pay claw backs, and patient steering
• Authorize the Michigan Department of Insurance and Financial Services to regulate PBMs
• Require PBMs to file transparency reports
• Prevent pharmacies from entering a contract that prohibits disclosure of drug prices or comparative selling prices, and interferes with a patient’s right to receive an eligible drug

Mark Cuban, American billionaire, entrepreneur, and well known “shark” from ABC’s Shark Tank, launched the discount e-pharmacy Mark Cuban CostPlus Drug Company in January 2021. It sells directly to consumers, only marking up drugs by 15 percent, plus a $3 pharmacy fee, by completely cutting out wholesalers, PBMs, and pharmacies out of the equation. The company’s foundation is transparency in every area of the business, from pricing to manufacturing to prescription delivery and more.

“The markup on potentially lifesaving drugs that people depend on is a problem that can’t be ignored.” – Mark Cuban, American Billionaire and Entrepreneur