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Lawmakers weigh PBM reforms — disclosure and fiduciary duties clash with insurers over market effects
Summary
Senate Bill 547 would expand PBM oversight by imposing fiduciary duties, banning spread pricing, limiting steering to PBM‑owned pharmacies, and increasing rebate reporting. The Insurance Department urged targeted transparency to avoid destabilizing markets; PBMs and insurers warned of higher premiums and legal risks.
Sen. Cindy Rosenwald described SB547 as a multi‑part approach to improve prescription affordability by increasing PBM transparency and prohibiting practices that can divert revenue away from plan sponsors and pharmacies. Her bill would require PBMs to act in the best interest of the contracting carrier, ban spread pricing (charging plans more than pharmacies receive), prohibit steering to PBM‑owned pharmacies, and require aggregate reporting of rebates and fees.
Commissioner Bettin Court and Dr. Jason Azis of the Insurance Department broadly supported increased transparency but urged precision: lawmakers should focus on net‑cost transparency and avoid measures that could be preempted by ERISA for self‑funded plans or that eliminate contracting tools that plans use to control costs. Dr. Azis noted targeted, plan‑year reporting is likely more useful than overly frequent quarterly estimates and emphasized the need to avoid measures that would raise premiums by shifting risk.
PBMs and plan representatives — including Sigma/Express Scripts, Harvard Pilgrim, PCMA and AHIP — opposed key provisions, especially a statutory fiduciary duty and an outright ban on spread pricing. They argued those steps would remove contracting choices, shift risk back to insurers (raising premiums), and carry legal/preemption risks for self‑funded plans. PBMs suggested alternative approaches: a duty of good faith, optional pass‑through pricing, clearer registry and tailored transparency that targets net costs.
Nut‑graf: The hearing highlighted a common policy tension: lawmakers and consumer advocates want more clarity and fewer conflicts of interest in drug benefit administration, while insurers and PBMs warn that blunt statutory mandates could increase costs or prompt litigation. Insurance Department staff offered to help craft targeted, market‑aware reforms.
Next steps: Committee staff and the Insurance Department indicated amendments and technical assistance will be needed to clarify scope, avoid ERISA preemption, and craft workable reporting standards.
