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Assembly committee hears bill to increase transparency of pharmacy benefit managers
Summary
Sen. Scott Wiener introduced SB 41, a bill aimed at increasing transparency and limiting certain PBM compensation and patient-steering practices that witnesses say are hurting independent pharmacies and raising drug costs.
Sen. Scott Wiener introduced Senate Bill 41 to the Assembly Judiciary Committee, saying the bill would require transparency and curb practices by pharmacy benefit managers, or PBMs, that he and several witnesses said increase drug costs and push patients away from neighborhood pharmacies.
Wiener said PBMs began as administrators for formularies and negotiating drug prices but “have now grown over the decades into mega players in the health care space.” He told the committee the bill would stop patient steering to PBM-owned pharmacies, end spread pricing and require PBMs to pass through negotiated rebates to payers.
Independent pharmacy owners testified in support. Dr. Clint Hopkins, owner of Pucci’s Pharmacy in Sacramento, said PBMs “dictate contracts with underpay and force pharmacies to close” and described patients being forced to use a PBM-owned mail-order pharmacy for specialty medicines. Sonia Frausto, owner of 10 Acres Pharmacy, said she must close her pharmacy because reimbursements from PBMs are too low and described multiple local pharmacy closures.
Opponents included the Pharmaceutical Care Management Association (PCMA) and America's Health Insurance Plans (AHIP). Lisonbee Ramey of PCMA said the legislature recently required PBM licensure and expanded data reporting under AB 116, and urged delay until that data is available. John Wenger of AHIP raised federal preemption concerns under ERISA for portions of the bill that would affect self-funded plans.
Committee members pressed the author on differences from prior bills and on confidentiality provisions in AB 116. Wiener said the licensure piece placed in the budget complements SB 41 and said he would work with the administration on confidentiality and other technical issues. Multiple members expressed sympathy for independent pharmacies and support for more transparency in the drug supply chain.
No final vote on SB 41 was taken during the hearing; the committee later recorded a motion to pass SB 41 as amended to the Appropriations Committee.
