Insurance department asks to standardize PBM licensing terminology; pharmacists and insurers urge broader review

Janelle Mittelstaedt, division director with the North Dakota Insurance Department, told members the department supports House Bill 1087 because it replaces the antiquated phrase “certificate of authority/registration” with the common statutory term “license” for administrators and pharmacy benefit managers (PBMs). She described the change as a technical update to align producer and company licensing language.

Mike Schwab, representing the North Dakota Pharmacists Association, supported licensing PBMs but urged the committee to review the underlying Chapter 26.127.1 statutory language before moving forward. Schwab flagged questions about enforceability, the definition of covered entities, and references to self‑funded (ERISA) plans that he said may create preemption risks and leave parts of the chapter vulnerable to legal challenge. He asked the committee to consider amendments addressing those concerns.

Johannes “Johnny” Palsgraf, general counsel for the Insurance Department, said the department is not seeking broader PBM regulation with this bill; the intent is a narrow, clarifying change so PBMs are on the same legal footing as other licensees. Palsgraf said the department would prefer to address more substantive PBM reforms in a separate bill coordinated with stakeholders. He told the committee licensing language is the correct immediate fix.

Representative Jim Casper and others urged the committee to consider Schwab’s concerns and possible statutory cleanup; Representative Ben Koppelman suggested holding the bill over for committee work on amendments. The department and stakeholders agreed to continue discussions. The committee proceeded to entertain amendments and left the record open for further work.