Louisiana insurance regulator outlines enforcement plan to implement Act 474 targeting PBM practices

The Louisiana Department of Insurance outlined how it will enforce Act 474 and implement new pharmacy benefit manager (PBM) rules during the Pharmacy Benefit Manager Monitoring Advisory Council meeting on Sept. 22 in the Henkel Room. Deputy Commissioner Frank Opelka described the department's complaint-driven enforcement approach, new reporting requirements and the timetable for several provisions.

Opelka said the statute deletes prior exceptions and makes spread pricing "blanket prohibited throughout the state." He told the council the department will rely largely on complaints and market-conduct investigations rather than prospective contract reviews to detect violations. "Implementation of that is essentially through complaints or notification of market conduct within the state," Opelka said.

The law requires PBMs to reimburse eligible local pharmacies at NADAC (the National Average Drug Acquisition Cost) plus a markup and a professional dispensing fee beginning in January; Opelka said the department is preparing guidance and expects the ingredient-side markup to land around 1.6%. He said the statute also requires PBMs to create an appeals process giving pharmacies 15 days from payment to request reprocessing if the paid amount does not cover acquisition cost, and that PBMs must notify pharmacies when a group of claims should be reprocessed.

Act 474 also prohibits so-called effective-rate clawbacks, DIR fees and other post-sale aggregate reductions by PBMs to local pharmacies and outlaws patient-steering tactics and certain uses of patient data. The law delays the requirement that rebate dollars be passed through to plan sponsors until Jan. 1, 2027 to allow plans and PBMs to renegotiate contracts; Opelka said the pass-through language will become part of the department's form-review process so approved plan forms explicitly disclose how rebates are allocated to sponsors and members.

Opelka said the law expands the commissioner's authority to audit PBM compensation programs and contracts with issuers and pharmacies. He estimated an initial contract cost of roughly $90,000 per PBM for in-depth compensation-program reviews and said the department will seek to shift available budget authority to cover as many reviews as it can. He described two enforcement tracks: an individual complaints process that can trigger claim-level fixes and a market-conduct escalation for widespread or systemic noncompliance.

The statute also tightens civil remedies and reporting. It classifies violations of the rebate pass-through requirement as unfair trade practices subject to fines; Opelka described the statutory penalty structure, including a $1,000-per-violation cap up to $100,000 for non-negligent violations and higher negligence/knowing-violation penalties (he said the department expects negligent-violation thresholds would be the more likely enforcement path, with fines up to $25,000 per violation and aggregate ceilings that could reach $500,000 per six months). PBMs must file an annual certification by their CEO or CFO attesting compliance with rebate pass-through requirements.

Opelka said the act requires significantly more granular transparency data than prior law: PBMs will report totals at the plan or issuer level (the department intends plan-level reporting), including total rebates received, total administrative fees, total price concessions, rebates passed through at point of sale, reimbursements disaggregated by local and nonlocal pharmacies, specialty-drug rebates, payments to PBM-owned affiliates and the PBM's vertical structure. The department will publish an aggregated transparency report 60 days after receiving filings and will open an audit function to validate filings.

Opelka told the council the department will issue guidance in the next month or two to define terms such as "significant" price increases for manufacturer WAC notification (the law requires manufacturers to notify the department within 30 days of specified WAC increases). He also said the department may pursue regulation for areas where the statute leaves interpretive questions, especially if marketplace confusion becomes apparent.

The council discussed the legal reach of the statute to cover PBM-related offshore entities and affiliated group-purchasing organizations; Opelka said the law is written to capture PBM activity from manufacturer to plan and that entities acting as PBMs in Louisiana should be licensed and subject to the statute, though enforcement would require detection and audit work.

Ending: The department said it will circulate guidance and the updated transparency-reporting template, set up a certification process for PBM executives, and begin auditing filings and complaints under the new law. Opelka said budget limits will constrain how many in-depth compensation-program exams the department can complete in the first year but that the agency will prioritize work to address high-risk or high-volume complaints.