Michigan insurance regulator summarizes PBM licensing, transparency findings for Legislature

The House Oversight Subcommittee on Public Health and Food Security heard a two-part presentation from the Michigan Department of Insurance and Financial Services on the state gency—ffort to license pharmacy benefit managers and aggregate the firms' statutorily required transparency reports.

DIFS legislative liaison Jenny Geese said the licensing and reporting framework traces to an executive task force and 2022 legislation that amended the insurance code. "Public Act 11 of 2022 amended the insurance code to require PBMs operating in Michigan to be licensed by DIFS beginning January 1st, 2024," she told the committee, summarizing the statute's objectives to increase transparency and regulatory control.

Joseph Sullivan, DIFS director of innovation and research, presented the department ggregation of PBM filings and the department's analysis. Sullivan said the PBM transparency tables include the aggregate wholesale acquisition costs by therapeutic category, the total rebates reported from manufacturers, fees, and the amounts passed through to Michigan health plans and enrollees. "The aggregate amount of rebates that PBMs reported receiving from all manufacturers was just under $2 billion," he said, and "the PBM ggregate retention amount was about $259 million." Sullivan added that the aggregate retained rebate percentage reported by PBMs was roughly 7.7 percent and that aggregate reported fees were about $140 million.

Sullivan also summarized regulatory mechanics spelled out in statute. Among the items he listed: PBM license applications must include organizational documents and financial viability information; licenses renew every two years with a retail pharmacy network adequacy report; PBMs must maintain MAC (maximum allowable cost) lists and provide pharmacies timely access and notification; PBMs must establish an administrative appeals process with stated timelines; and the department may suspend, restrict or revoke licenses and impose civil penalties of up to $20,000 per month while violations persist.

On enforcement and oversight, Sullivan said DIFS may initiate market-conduct reviews and audits when complaints or systemic issues are suspected. DIFS has issued several public bulletins to coordinate licensing, transparency filers and investigations, and it has set up a dedicated PBM web page and a consumer complaint process. Sullivan told lawmakers the department logged about 57 PBM complaints opened in 2024 and had 18 open in 2025 (roughly 80 total to date), with recoveries since 2024 totaling about $243,000.

Committee members pressed DIFS on the limits of the agency's review. Representative Pakquette Green asked whether the department has an audit mechanism beyond self-attestation; Sullivan said initial submissions are self-attested but DIFS can trigger a market-conduct review or an audit if problems are detected and can compel production of records under its statutory authority.

Sullivan noted several statutory protections for PBM filings: the law treats certain information submitted for examination as proprietary and confidential, which limits public release. He also said a new DIFS-produced transparency report will appear in August 2025 and will allow side-by-side comparison with the 2024 data.

The subcommittee's questions focused on reporting exemptions (Sullivan said exemptions typically apply when a licensed PBM has no Michigan-regulated health-plan clients), timelines for enforcement, and potential rule or statutory cleanups (Sullivan suggested eliminating redundant licensing as a possible efficiency). The committee took no formal regulatory action at the hearing; the session concluded after additional testimony by industry and pharmacy representatives.

Next steps: DIFS will publish its next PBM transparency report in August, and the committee indicated it may follow up in subsequent oversight sessions.