States and Federal Government Debate PBM Transparency and Drug Cost Regulation
What happened
The Department of Labor proposed a rule requiring Pharmacy Benefit Managers (PBMs) serving self-insured and level-funded group health plans to disclose their fees and compensation under ERISA rules. This rule, supported by a bipartisan coalition of 45 state attorneys general, is likely to be published soon after the White House budget office finished its evaluation. Separately, states are actively regulating PBM practices; for example, Colorado is targeting compounds and topicals with its cost schedule, and federal courts are debating PBM ownership in Tennessee.
Why it matters
The proposed federal rule mandates transparency regarding PBM compensation, including manufacturer rebates and amounts recouped from pharmacies. State actions, such as those in Colorado, directly target drug costs and PBM market structure. These regulatory shifts affect how PBMs operate and how drug costs are managed across different health plans.
Who's involved
- ColoradoColorado is targeting compounds and topicals with its cost schedule.
- TennesseeFederal courts are debating whether a state can restrict a PBM's ownership of a drugstore.
- New YorkNew York is subject to PBM transparency trends and state regulatory pressure.
- OhioOhio is subject to PBM transparency trends and state regulatory pressure.
- TexasTexas is subject to PBM transparency trends and state regulatory pressure.
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
- ColoradoSpeculative
Colorado's regulatory action might change drug costs for health plans and consumers.
- New YorkSpeculative
New York may see changes in the costs of health plan services due to PBM transparency trends.
- OhioSpeculative
Ohio could see changes in the funding structure of healthcare programs due to PBM transparency trends.
- TexasSpeculative
Texas might alter the pricing and supply chain of pharmaceuticals as PBM practices are regulated.
- TennesseeSpeculative
Tennessee could see changes in the operational costs of drugstores if PBM ownership is restricted.