Conference report for Senate Bill 1-40 seeks fair pharmacy reimbursement and protects patient choice, sponsor says

Representative McGuire presented the conference committee report for Senate Bill 1-40, a pharmacy benefit manager (PBM) reform bill intended to ensure fair reimbursement for pharmacies, preserve patient choice, and protect independent community pharmacies from unfavorable contracting practices.

McGuire said the conference report would change reimbursement for independent pharmacies with liquor licenses to net acquisition cost (NADAC) plus dispensing fee, allowing contracted dispensing fees to be set in private contracts; the report also adds anti-steering protections so PBMs cannot require patients to receive specialty drugs from an affiliate or impose higher cost-sharing when patients choose a nonaffiliate pharmacy. Mail-order specialty pharmacies would be exempted from this requirement.

The sponsor said the Department of Insurance reporting and network adequacy requirements remain part of the framework: plan administrators may provide patient communications about networks but must be accurate and include nonaffiliated pharmacies; incentives for network use are allowed provided plan administrators comply with reporting requirements.

Representative McGuire told the committee an audit by the Attorney General’s office found $323 million in spread pricing collected by PBMs in Medicaid managed care and the state employee health plan over a five-year lookback, and said the committee should study potential fiscal impacts on Medicaid managed care and the state employee plan. Because of concerns about a possible fiscal impact, the conference report excludes those state plans from the bill’s reimbursement mandate pending a summer study and further review.

Representative Pierce asked whether the bill’s goals would reduce consumer costs or primarily shore up reimbursement to independent pharmacies; McGuire responded the bill adds “protections” and is intended to prevent closures of independent pharmacies by improving reimbursement.

The committee adopted a procedural motion to permit the conference committee report for Senate Bill 1-40 to be considered after April 15, 2025; the roll call was recorded as passing (reported as “Passes 90”). The committee’s action was procedural and did not itself change contracts or reimbursement prior to further legislative action.

The sponsor said the conference committee planned a summer study on Medicaid and state-employee plan impacts and that administration officials were willing to open contracts for negotiation. McGuire noted recent AG audit findings as context for the measure.