Delaware Governor Matt Meyer signed Senate Bill 271 (SB 271) into law on September 8, 2026. The Act governs pharmacy benefit managers (PBMs) and provides significant new audit protections for pharmacies. The bill passed without opposition, 20–0 in the Senate and 40–0 in the House.
For pharmacies that have endured repeated PBM audits, SB 271 is significant. It targets audit frequency and cost, reimbursement appeals, retaliation, unilateral contract changes, and therapeutic substitution. These provisions give pharmacies more rights and protection against abusive PBM practices.
Audit Limits and Cost Allocation
SB 271 provides that “[a]n entity [i.e., PBM] may not initiate an audit of a pharmacy more often than once every 12 months.” A PBM must provide an audited pharmacy with a phone number, a secured fax number, or, if available, access to a secure portal for audit questions. A pharmacy must also be given a range of prescription numbers at least five business days prior to an audit.
A wholesale invoice audit “must be limited to verification of purchased inventory specific to the pharmacy claims paid by the plan sponsor or pharmacy benefits manager conducting the audit.” Redacted supplier invoices in the pharmacy’s or pharmacist’s possession are acceptable to support a claim.
The PBM conducting the audit must bear its cost. A PBM “may not impose a fee or charge, other than a recoupment or chargeback, or pass costs along related to an audit to the audited pharmacy or pharmacist.” Recoupments and chargebacks therefore remain available.
These protections do not apply to certain investigative audits, including when “[f]raud, waste, abuse, or other intentional misconduct is indicated by physical review or review of claims data or statements.”
Strengthened Pharmacy Reimbursement Appeals and Escalation to the Department of Insurance
In the context of pricing appeals, SB 271 clarifies that a contracted pharmacy or its representative may appeal the amount of a drug reimbursement. The appeal window grows from 10 to 40 calendar days after the fill date when the reimbursement is less than the net amount the pharmacy paid its supplier or the reimbursement floor established under § 3372A(7).
If an appeal is denied, the PBM “must provide a detailed reason for the denial.” With its final determination, the PBM must also notify the pharmacy that “[a]ll appeals must be filed with the Department within 10 calendar days from the date you receive the pharmacy benefits manager’s final determination.”
The Insurance Commissioner reviews whether reimbursement complies with § 3372A(7), which bars payment below the national average drug acquisition cost in effect on the date of service or, if that cost is unavailable, the wholesale acquisition cost. The Commissioner may deny the appeal or grant it and “order the pharmacy benefits manager to pay the claim in accordance with the Commissioner’s findings.” The non-prevailing party pays the Department’s processing costs. If an appeal is granted, the PBM must pay the original claim and subsequent and similar claims under similarly applicable contracts without requiring the pharmacy to reverse and rebill.
This new provision provides pharmacies with additional time to dispute reimbursement for underpaid drugs, while the ability to escalate denied appeals to the Commissioner provides an additional avenue for enforcement.
Prohibition on PBM Retaliation
Many pharmacies hesitate to challenge PBMs for fear of network consequences. SB 271 provides significant protection against such consequences. It bars retaliation against a pharmacy or pharmacist for disclosing information to a court, agency, or legislative body when the pharmacy or pharmacist has reasonable cause to believe the information is evidence of a violation of law. Retaliation includes “the cancellation or restriction of, the refusal to renew, or the refusal to offer a contract solely because” of protected conduct. Protected conduct also includes filing complaints with a PBM or the Department and appealing to the Commissioner.
Contract provisions that prohibit these disclosures are “against public policy and . . . void and unenforceable” in contracts entered into, amended, extended, or renewed after December 31, 2026. Pharmacies should take note of this date and review their contracts accordingly.
60 Days’ Notice Before PBM Contract Amendments
A PBM may not “[a]mend a contract between a pharmacy benefits manager and a pharmacy or pharmacist without providing at least 60 days’ notice to the affected pharmacy or pharmacist.” Previously, Chapter 33A required 60 days’ notice only for amendments to pharmacy audit terms, so pharmacies will now receive additional time to consider proposed contract changes. Pharmacies should carefully review communications from PBMs, which may establish new terms for their contracts going forward.
Limits on Therapeutic Substitution Mandates
The Act also prohibits a PBM from requiring “a pharmacy to dispense a therapeutically equivalent or therapeutically alternative drug that costs the enrollee more out-of-pocket than the prescribed drug, unless the substitution is made for medical reasons that benefit the enrollee.”
Additional PBM Restrictions and Consumer Protections
SB 271 also refines existing prior authorization limits for emergency and chronic-condition prescriptions and changes PBM rebate reports to the Commissioner from quarterly to annual. It also restricts unit-of-use packaging requirements. SB 271 further bars PBMs from sharing enrollee- or prescriber-identifiable data with an affiliated pharmacy for commercial purposes beyond facilitating pharmacy reimbursement, formulary compliance, or utilization review. This restriction is intended to limit the use of prescription information for patient steering to affiliated pharmacies. However, some PBM contracts require pharmacies to transfer certain prescriptions to affiliates, and the new provision does not expressly prohibit those contractual requirements.
Effective Date and Applicability of Delaware SB 271
The Act became effective upon enactment, but it “applies to contracts between pharmacy benefits managers and pharmacies or pharmacists that are entered into, renewed, amended, or extended 6 months after enactment.” With enactment on September 8, 2026, that means contracts entered into, renewed, amended, or extended on or after March 8, 2027. The anti-gag provision references a separate December 31, 2026, date, and the statute does not expressly address how the two dates interact for contracts executed between January 1 and March 7, 2027. Whether SB 271 governs a particular PBM relationship will therefore depend on the contract’s timing and the provision at issue.
What SB 271 Means for Pharmacies
SB 271 gives Delaware pharmacies meaningful new tools to challenge PBM practices. The annual audit limit and cost rule ease the burden of serial audits. The longer appeal window and Department of Insurance review create a stronger path to contest underpayments, and the anti-retaliation provisions reinforce those rights.
How Frier Levitt Can Help
Frier Levitt has extensive experience representing pharmacies in PBM audits, audit appeals, reimbursement disputes, network terminations, and contract negotiations. Our attorneys can help pharmacies assess when SB 271 applies to their contracts, navigate the new audit and appeal protections, escalate denied appeals to the Department of Insurance, and respond to suspected retaliation.
Contact Frier Levitt today to discuss how Delaware’s new PBM law may affect your pharmacy.
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