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Committee hears bills to register, license PSAOs; supporters seek transparency, opponents warn of burdens
Summary
The House Committee on Behavioral Health and Health Care heard competing testimony Feb. 6 on bills that would require pharmacy services administrative organizations to register or be licensed in Oregon, with supporters saying the changes would add transparency for independent pharmacies and opponents warning new rules could raise costs or force some PSAOs out of the state.
The House Committee on Behavioral Health and Health Care heard competing views on legislation to bring pharmacy services administrative organizations (PSAOs) under state registration or licensing requirements, with advocates saying the measures would add transparency and opponents warning the proposals could impose burdens that raise costs for independent pharmacies.
Supporters told the committee on Feb. 6 that PSAOs, which many independent pharmacies use to handle contracting, claims submissions and appeals with pharmacy benefit managers (PBMs), are an important but under‑examined part of the drug supply chain. “House Bill 2,149 will allow the State to better examine what value and what costs PSAOs are bringing to the independent pharmacies and the drug supply chain,” Kelsey Wilson of the Pharmaceutical Care Management Association said in support of the bill.
The bills would require PSAOs to register or be licensed and to disclose affiliations and contract terms to the pharmacies they represent. Proponents, including Rep. Nancy Nathanson (sponsor) and Rep. Bobby Levy, said state registration would close a regulatory gap that can leave pharmacies unsure who negotiates on their behalf. “This bill ensures that PBMs remain subject to the laws that govern them, even when they enter into agreements with PSAOs,” Rep. Levy told the committee.
Why it matters: Committee members and advocates said the proposals are intended to make contract terms and ownership transparent so pharmacies can understand reimbursement rates, audits and clawbacks whether a contract is held directly with a pharmacy or through a PSAO. Proponents cited instances where pharmacies received payments or notices without sufficient identifying information, which complicated reconciliation and appeals.
What supporters said - Kelsey Wilson (PCMA) said PSAOs represent the majority of independent pharmacies and called for licensing so the state can “examine what value and what costs PSAOs are bringing.” She noted data showing three large PSAOs are owned by wholesalers that control most drug distribution nationally. - Fawn Berry of Moda Health and Dr. Regina Mendez Harper of Prime Therapeutics both said the bills would extend existing PBM rules to contracts formed through PSAOs and require PSAOs to share contracts and ownership disclosures with pharmacies. “This bill is just really trying to make sure that there's some accountability and transparency into this side of the supply chain,” Mendez Harper said. - Sponsors and several pharmacy groups urged parity so protections enacted in earlier PBM laws apply regardless of whether a pharmacy contracts directly or via a PSAO.
Concerns and opposition - Leah Lindahl, vice president of state government affairs for the Health Care Distribution Alliance, and Lucas Coody, director of government affairs for AlignRx (an independent PSAO), testified in respectful opposition to the bills as drafted. They said PSAOs provide voluntary, back‑office services used by independent pharmacies for an average monthly fee (witnesses described an approximate market fee of about $200) and argued registration or licensing regimes written for other entities could mischaracterize PSAO operations. - Witnesses warned that high licensing fees or administrative burdens could be passed back to small pharmacies. AlignRx said it already shares contract and rate information with its pharmacies and urged sponsors to craft a targeted disclosure/registration approach rather than a broad licensing requirement that might force some PSAOs to stop operating in Oregon. - Several witnesses urged workgroup negotiation to refine language. “We respectfully oppose as written,” Coody said, but added he appreciated inclusion of PSAOs in anti‑retaliation and appeals protections and offered to work with sponsors on technical fixes.
State comparisons and specifics Representative Nathanson summarized other states' approaches during testimony: Maryland requires PSAO registration with an insurance authority; Montana enacted parity for PBMs and PSAOs in 2023; New Jersey requires PSAO registration with its Department of Banking and Insurance; Pennsylvania passed registration with a $500 fee in 2024; Mississippi was reported to be considering related disclosure requirements. Witnesses and sponsors emphasized distinctions between registration (simple notification) and full licensure (fees, annual renewals, regulatory oversight).
Unresolved items and next steps Committee members and witnesses agreed to continue negotiations. Chair Noss suggested staff, sponsors and industry stakeholders meet to develop amendments that preserve transparency while minimizing unintended burdens on independent pharmacies. The committee closed the public hearing on House Bill 2,149 and opened an additional hearing on related language in House Bill 3,226; sponsors said both measures will be part of ongoing work to shape final PBM/PSAO reform.
Ending: The committee did not take formal action on either bill at the hearing and directed parties toward follow‑up meetings to draft compromise language ahead of future work sessions.
