Assembly advances SB 41 targeting pharmacy benefit manager practices blamed for pharmacy closures and higher drug costs

SACRAMENTO — The Assembly Health Committee on July 8 voted to send SB 41, a broad package of reforms aimed at pharmacy benefit managers (PBMs), to the Judiciary Committee after extensive testimony from independent pharmacists, patient advocates and PBM and plan representatives.

Senator Scott Wiener, the bill’s sponsor, said PBMs began as administrative contractors for health plans but have become vertically integrated firms that now “own the health plans, the pharmacy down the street, the mail order pharmacy” and have contractual incentives that can favor higher list prices and PBM‑owned dispensing. Wiener said the bill (as amended to reflect earlier budget licensure language) would prohibit steering patients toward PBM‑owned mail‑order pharmacies, restrict spread pricing, and prohibit PBMs from pocketing portions of rebates that create incentives to prefer higher‑priced drugs.

Independent pharmacists described financial strain and rapid closures. “PBMs now dominate not only the pharmacy market, but also the health care market at large,” said Dr. Clint Hopkins, owner of Pucci’s Pharmacy in Sacramento. Hopkins described patients forced to use a PBM‑owned mail‑order pharmacy and reported instances where the PBM‑affiliated mail service charged patients large copays and delayed shipments for routine specialty medication. Sonia, owner of 10 Acres Pharmacy, told the committee she was “managing the pennies, literally the pennies,” and said reimbursements sometimes fall below pharmacy acquisition cost.

PBM and plan representatives opposed the bill, saying recent budget trailer legislation creates licensure and data reporting that should allow the Legislature to evaluate the supply chain before adopting additional restrictions. Lisonbee Ramey of the Pharmaceutical Care Management Association and John Wenger of America's Health Insurance Plans argued some provisions would raise costs for consumers or conflict with federal ERISA law governing employer plans.

Committee members asked about available data; witnesses said extensive reporting to the Office of Health Care Affordability and the licensure framework will produce more transparency, but supporters said changes are needed now to halt what they described as ongoing harm to pharmacies and patients.

The committee recorded a roll call and referred the bill to the Judiciary Committee for further consideration. Supporters urged timely action to protect neighborhood pharmacies and to reduce patient cost exposure; opponents stressed careful, data‑driven policy and potential legal complications for employer plans.

Ending: The bill advances to Judiciary; lawmakers and stakeholders signaled further negotiation as the state begins collecting more PBM data under recently enacted budget trailer processes.