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Maryland hearing on HB 321 presses PBM oversight, legal limits on ERISA plans
Summary
Sponsor and pharmacy groups urged the Health and Government Operations Committee to expand state oversight of pharmacy benefit managers to apply to ERISA plans; PBM trade group warned of federal preemption and likely litigation. No committee vote was taken.
Delegate Michael J. (Del.) Kipke, sponsor of House Bill 321, told the House Health and Government Operations Committee that the bill would extend existing Maryland protections for pharmacies to ERISA plans, arguing the change would let the Maryland Insurance Administration enforce audit and transparency standards across a wider share of the market. “This will put more teeth in our laws,” Del. Kipke said as he opened the hearing.
The bill’s supporters included independent and chain pharmacists who described falling reimbursements, clinic and pharmacy closures and shrinking pharmacy workforces. Michael Patty of Independent Pharmacies of Maryland said owners are “stressed out” and often run stores alone after reduced staffing and shrinking margins. Brian Hose, CEO of Epic Pharmacies, told the panel the Supreme Court’s 2020 rulings made it possible for states to regulate some PBM activity even when ERISA plans are involved and said the bill would help enforce negotiated protections for pharmacies across more of the insurance market.
Opponents warned of legal risk and unintended effects. Mike Johansen of the Pharmaceutical Care Management Association (PCMA), representing PBMs, said the bill contains provisions that affect plan administration — for example, choice of pharmacy — and argued federal law limits states’ authority in that area. “There will be challenges,” Johansen said, urging an unfavorable report. Fred Brown of the National Labor Alliance of Healthcare Coalitions told the committee that union trustees who design multi‑state Taft‑Hartley health plans could see their plan‑design authority limited and also urged an unfavorable report.
Committee members pressed both sides about litigation in other states and the possible effect on plan sponsors. Committee Chair Jocelyn Pena Milne and Vice Chair Bonnie Collison asked supporters and opponents to meet with the sponsor to try to refine language; Johansen expressed willingness to discuss specific provisions the PBM industry finds problematic.
The hearing featured repeated references to an October 2024 Federal Trade Commission report that found large PBMs marked up many specialty and generic drugs substantially; witnesses on both sides cited the report to support their positions but disagreed on its interpretation and weight. Del. Kipke and pharmacy witnesses pointed to the FTC finding that affiliated PBM pharmacies generated billions of dollars in dispensing revenue in excess of estimated acquisition cost; PBM representatives described the FTC analysis as preliminary and contested.
No formal vote or action was taken during the hearing; committee members asked staff and stakeholders to continue technical discussions ahead of future committee action.
Ending: The committee concluded the hearing on HB 321 without a vote and moved on to subsequent bills on the agenda. Committee members requested follow‑up information about litigation outcomes in other states and invited PBM and pharmacy representatives to meet with the sponsor to explore compromises or clarifying language.
