Committee advances PBM reform bill tied to transparency measure; industry warns of higher costs
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Summary
Senate Bill 387, amended to require PBM audits, fiduciary duties, rebate pass‑through and limits on PBM compensation models, was reported out by the Senate Insurance Committee April 1. PBMs and industry groups warned the changes could raise premiums and create legal risks; sponsors argued reforms protect patients and independent pharmacies.
The Senate Insurance Committee voted to report Senate Bill 387 as amended on April 1, 2026. The bill, advanced by Vice Chair Sen. Bass, packages a set of pharmacy benefit manager (PBM) reforms that committee sponsors say will increase transparency and realignment of PBM incentives toward patient access.
As amended, SB387 would do several things: limit PBM audit look‑back periods to 12 months; allow consolidated appeals for pharmacies; require PBMs to certify compliance annually and subject them to DOI audits (including examination of books and records across related corporate entities); prohibit formulary design that favors a brand over therapeutically equivalent products strictly to capture rebates or block certain pharmacies; require pass‑through of rebates and fees to plan sponsors; and authorize a flat administrative fee model (per‑member‑per‑month or per‑prescription) with a narrowly defined performance bonus option.
Sponsor Sen. Bass summarized the goals: to give regulators “line of sight” into vertical business structures and to “put independent pharmacies on a more even playing field,” while maintaining continuity of care when formularies change. He tied SB387 to SB401 (the Price Affordability Board bill) so transparency on manufacturer pricing would feed into oversight of PBM business practices.
Industry witnesses pushed back. Phil Cristofornelli of the Pharmaceutical Care Management Association argued several core elements would raise costs or reduce incentives to lower prices: “When we move to a flat administrative fee, we now have to go to our clients and say, ‘Listen, I need you to pay me upfront,’ ” he said, warning that delinking PBM compensation from price metrics could reduce leverage used to negotiate manufacturer discounts. He also said imposing a fiduciary duty could create unprecedented legal exposure and higher costs for plan sponsors.
Patient‑advocacy witnesses split. Independent pharmacist and patient Steven Lee supported the reforms, saying they improve patient access and protect local pharmacies. Jen Laws of Community Access National Network urged a broader focus beyond WAC‑type metrics and stressed that patient voices should be included in oversight.
Committee members spent extended time questioning how rebates flow, what net price is used in formulary decisions, how performance bonuses would be structured, and whether certain prohibitions would unintentionally raise premiums. The DOI and bill drafters said existing and proposed language aims to preserve contracting flexibility but remove perverse incentives that can favor higher list prices.
After questions and debate, Senator Bass moved to report SB387 as amended. With no objections, the committee reported the bill out by voice consent. The bill will be tracked alongside SB401 and other related instruments as the legislature considers how to combine transparency and PBM accountability.
