A recently introduced California Senate Bill, SB 966 (the Bill), would create new Pharmacy Benefit Manager (PBM) regulations in the State and bring much-needed protections against PBM abuses for California pharmacies. On January 24, 2024, California Senator Scott Wiener introduced the Bill, stating, “We cannot allow these middlemen to continue charging exorbitant and unfair prices while Californians are forced to ration life saving medication,” adding, “[b]y reining in the worst PBM abuses, SB 966 helps control health care costs in order to deliver savings to Californians.” The Bill itself would introduce powerful protections for independent California pharmacies against many of the worst PBM abuses.
The Bill as written would regulate PBMs in the following ways, among others:
- Requiring all PBMs to be licensed through the State Board of Pharmacy.
- Prohibiting “discrimination” against “nonaffiliated” (independent) pharmacies, including among other things, “[r]efusing to contract with or terminating a contract with a nonaffiliated pharmacy on the basis that the pharmacy is a nonaffiliated pharmacy or for reasons other than those that apply equally to affiliated pharmacies.”
- Although there are no explicit “Any Willing Provider” protections in the bill, this clause could be construed as such.
- Prohibiting the “steering” of patients to affiliated pharmacies, allowing patients to choose which in-network pharmacy best meets their needs.
- Prohibiting spread pricing, where PBMs charge a plan more for a drug than it pays a pharmacy.
- Requiring that the PBM pass through drug rebates to plans or patients.
- Prohibiting pharmacist or pharmacy accreditation standards or recertification requirements inconsistent with, more stringent than, or in addition to federal and state requirements to obtain reimbursement for a covered drug.
- This is especially important for independent specialty pharmacies, who may be improperly excluded from networks due to over-restrictive standards.
- Banning Direct and Indirect fees and, arguably, Generic and Brand Effective Rates (GER and BER).
- Prohibiting contracts between PBMs and manufacturers that restrict access to or implement exclusivity for drugs.
As introduced, the Bill would provide pharmacies protections on par with some of the most comprehensive PBM regulations in the country, and would greatly advance the state of the law for California pharmacies (which has greatly lagged behind other states in terms of available legal protections). Although the Bill is currently in its infancy, California pharmacies should reach out to their representatives in the State Senate and urge them to support the bill.
How Frier Levitt Can Help
Frier Levitt has been actively engaged in political action throughout the country to draft and support legislation to curb PBM abuses. Last year, Co-Founding Partner Jonathan Levitt testified to the Senate Committee on Finance regarding PBM impacts on patients and taxpayers, and our attorneys continue to work with legislators and interest groups to advocate for legislation nation-wide and in individual states. Contact Frier Levitt today to learn more about how we can assist your pharmacy or organization with political action.
