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OCA outlines pharmaceutical workstream: PBM licensing proposal, CalRx expansions and HPD non‑claims collection
Summary
OCA staff summarized pharmaceutical cost drivers and state budget proposals including a May Revision plan to require pharmacy benefit managers (PBMs) to be licensed by the Department of Managed Health Care and to report data to HCAI's Healthcare Payments Database (HPD). Staff described CalRx procurement work, SB 17 reporting and planned HPD
OCA staff gave the Board a detailed briefing on pharmaceuticals as a driver of healthcare spending and on several state policy proposals and data initiatives intended to improve transparency and affordability.
State budget and policy proposals: Director Landsberg told the Board the Governor’s May Revision proposes licensing PBMs under the Department of Managed Health Care and requiring PBMs to report data to HCAI’s Healthcare Payments Database. Landsberg said the aim of those proposals is “to really gain a better understanding of their costs with the ultimate goal of trying to improve affordability of prescription drugs in California.” The May Revision also proposes expanding the state’s CalRx procurement authority and providing $5,000,000 for emergency pharmaceutical response under CalRx and $90,000,000 in Proposition 35 funds for reproductive health investments.
Why it matters: OCA staff emphasized that retail prescription drugs have been a fast‑growing cost component and that pharmacy rebates, PBM practices, vertical integration and new high‑cost specialty drugs (for example GLP‑1s and cell and gene therapies) are meaningful drivers of spending and access issues. Staff noted prescription drugs can also reduce total costs when they prevent or control disease, but high out‑of‑pocket costs create adherence and access problems.
Data and regulatory steps: OCA said HPD will begin collecting non‑claims payments (capitation, rebates and other non‑claims flows) and plans to use a national standard for that collection. The HPD has already provided initial reports on retail prescription out‑of‑pocket costs and will begin collecting pharmacy rebate information from payers as part of non‑claims data collection later in the year. OCA staff cited SB 17’s reporting obligations for manufacturers on large wholesale acquisition cost increases and said OCA will continue publishing interactive visualizations based on SB 17 data.
Stakeholder reaction: Industry commenters offered to work with OCA. David Lai of California Life Sciences said the sector is prepared to be a resource to the agency. The California Hospital Association and some board members urged caution on methodological choices and requested OCA examine the interaction between hospital investments and price dynamics; CHA also criticized the speed of prior hospital sector decisions and urged more rigorous validation.
Next steps: OCA will continue stakeholder engagement, iterate HPD non‑claims reporting specifications, and coordinate with DMHC and other state agencies on PBM licensure language if it advances in the budget process. The Board received the update as informational.
