Louisiana recently introduced the Pharmacy Benefit Manager Regulation Act, aimed at supporting independent pharmacies. Governor Jeff Landry signed the Act No. 474 (the “Act”) into law last month on June 20, 2025. The Act is a comprehensive overhaul of the state’s approach to regulating Pharmacy Benefit Managers (“PBMs”). The Act introduces significant requirements and prohibitions for PBMs operating in Louisiana, with the goal of increasing transparency, ensuring fair reimbursement for pharmacies, and protecting consumers from unfair practices. The article will provide a detailed overview of the new updates.
Key Provisions and Definitions
The Act revises and introduces multiple sections of the Louisiana Revised Statutes, providing precise definitions for key terms including “pharmacy benefit manager,” “local pharmacy,” “maximum allowable cost list,” “rebates,” and “spread pricing.” Of particular significance, the Act defines a “local pharmacy” as a pharmacy domiciled in Louisiana that operates fewer than ten retail outlets under the same corporate ownership. By establishing this definition, the legislation aims to extend protections to numerous independent community pharmacies throughout the state.
Prohibitions on PBM Practices
- Rebate Retention: PBMs are prohibited from retaining any portion of manufacturer rebates. All rebates must be passed through to the plan sponsor, which can use these rebates to lower premiums, reduce cost-sharing for prescription drugs, or provide broader drug coverage. The allocation of these rebates must be clearly identified in the plan sponsor’s design and contract terms.
- Spread Pricing: The Act bans PBMs from engaging in spread pricing, where the amount charged to a health plan for a prescription drug exceeds the amount paid to the pharmacy, minus a PBM fee. While this practice is occasionally permitted with respect to specific written notice requirements, the Act will protect local pharmacies through an outright prohibition of spread pricing against them by PBMs.
- Effective Rate Pricing: PBMs are prohibited from using effective rate pricing for local pharmacies. This means PBMs cannot reduce payments to local pharmacies through reconciliation processes or aggregate payment reductions.
- Patient Steering: The Act prohibits PBMs from steering patients to pharmacies in which the PBM has an ownership interest or control, unless the patient is given written disclosure and acknowledges it. Patients must be informed of their right to use any pharmacy of their choice, and PBMs are barred from retaliating or treating claims differently if a patient chooses an alternate pharmacy.
Fair Reimbursement Requirements
- Minimum Reimbursement: PBMs must reimburse local pharmacies at no less than the National Average Drug Acquisition Cost (“NADAC”) for covered drugs, devices, or services. If a pharmacy is reimbursed below its acquisition cost, it has the right to appeal and, if successful, receive additional payment to match the acquisition cost.
- Appeal Process: The Act mandates a robust appeal process for pharmacies to challenge underpayments. Pharmacies have 15 days to file an appeal, and PBMs must respond with either additional payment or a detailed explanation. If a claim payment error is found, PBMs must notify all similarly affected pharmacies and make retroactive price adjustments.
Transparency and Reporting
- Annual Transparency Reports: PBMs must submit annual transparency reports to the Department of Insurance, detailing total rebates received, administrative fees, price concessions, rebates passed on to enrollees at the point of sale, reimbursement paid to local and non-local pharmacies, and more. The Department will publish these reports online, excluding confidential or proprietary information.
- Manufacturer Price Increases: Drug manufacturers must notify the commissioner of any significant price increases or the introduction of high-cost drugs, including explanations for such increases.
Oversight and Enforcement
- Commissioner and Attorney General Authority: The Commissioner of Insurance is empowered to review PBM compensation programs to ensure fair and reasonable reimbursement. The Attorney General has independent authority to investigate and enforce violations, seek restitution, and pursue treble damages and attorney fees.
- Enforcement Fund: The Act creates the Pharmacy Benefit Manager Enforcement Fund, which collects monies from violations and uses them to fund enforcement activities. Unexpended funds at the end of each fiscal year are returned to policyholders.
Advisory Council and Public Records
- PBM Monitoring Advisory Council: The Act restructures the advisory council within the Department of Insurance, including representatives from state agencies, pharmacy organizations, and the legislature, to monitor PBM practices and advise on policy.
- Confidentiality: Certain information submitted to the Department of Insurance is protected as confidential and not subject to public records laws, ensuring proprietary business information is safeguarded.
Implementation Timeline
Key enforcement provisions, including those related to spread pricing, rebate retention, and patient steering, will begin on January 1, 2027. The Act takes effect upon the governor’s signature or as otherwise provided by law.
Why These New Laws Matter
Louisiana’s Pharmacy Benefit Manager Regulation Act represents one of the most comprehensive state-level efforts to regulate PBMs, aiming to increase transparency, protect local pharmacies, and ensure that consumers benefit from manufacturer rebates and fair pharmacy reimbursement. The law establishes robust oversight mechanisms and significant penalties for non-compliance, positioning Louisiana as a leader in PBM regulation.
How Frier Levitt Can Help Pharmacies with Board of Pharmacy Issues
Frier Levitt represents pharmacies nationwide in challenging PBM audits, network access denials, reimbursement (including DIR fees and MAC reimbursement) and other critical aspects of the pharmacy-PBM relationship. Our attorneys have deep experience navigating state and federal PBM laws and advocating for pharmacy rights.
If your pharmacy is facing unfair PBM practices or needs legal guidance on state pharmacy laws, contact Frier Levitt to speak with a knowledgeable PBM litigation and pharmacy law attorney.
Frier Levitt provides strategic, industry-focused legal counsel tailored to your needs. Contact our team today to learn how we can help you.
