Growing Web of State Drug-Pricing Legislation Increases Challenges for Pharmaceutical Manufacturers and Other Industry Participants
35 min read
With proposed federal legislation on pause, state legislatures continue to target the pricing of pharmaceuticals, passing a number of new laws in 2020. As complexity at the state level continues to increase, pharmaceutical manufacturers and others in the distribution and payment chain face an expanding set of challenges. For example, certain states have fined pharmaceutical manufacturers tens of millions of dollars in the last eight months for allegedly failing to comply with certain price-related reporting requirements.
Since our last update, state legislatures have continued to propose and pass various forms of drug-pricing laws. In 2020 alone, states have considered over 400 proposed drug-pricing bills, with more than 20 signed into law.1 As state oversight increases, and ramps up in complexity, companies at each level of the pharmaceutical distribution and payment chain face new and potentially significant risks when it comes to decisions regarding their pricing practices.
To be clear, these states are not overtly challenging or restricting prices set by pharmaceutical manufacturers. Rather, the state legislative approach generally reflects an effort to target the cost of drugs through other means, such as by increasing pricing transparency, requiring disclosures from pharmaceutical benefit managers ("PBMs") and insurers, and capping consumer cost sharing on certain drugs. For example, some states now require pharmaceutical manufacturers that raise the price of a drug above a certain threshold (e.g., 10-15% increase in a year or 50% over five years) to provide written justifications for their pricing decisions or face fines for failing to provide the required information. Some states have even authorized consumers to import drugs from Canada—a hotly contested issue at the federal level in the last few years.
PBMs have also landed in the crosshairs of state oversight. For example, PBMs operating in certain states may be precluded from implementing certain targeted pricing strategies altogether (e.g., so-called "spread pricing," where a PBM sets one payment rate to the pharmacy but charges a higher rate to its health plan client). Other laws may require PBMs to submit detailed reports outlining confidential information aboutmanufacturer rebates or disclose to health plan sponsors prices the PBMs paid for drugs. These laws targeting PBMs are generating considerable attention and significant legal challenges.2
Although these various state laws share some similarities, they are far from uniform, which means that each statute further complicates what is an already complex series of reporting obligations, pricing thresholds, and restrictions for pharmaceutical manufacturers and others in the drug distribution and payment chain. Some even carry penalties and fines for noncompliance or failure to timely disclose required pricing information. For example, in just the last six months, California fined more than a dozen pharmaceutical manufacturers $17.5 million for failing to properly report price increases.3 Similarly, Nevada issued approximately $17 million in fines to more than twenty pharmaceutical manufacturers last fall for failing to report pricing data.4
Ongoing developments at the state level are contrasted by the relative inactivity by Congress, which largely has shelved the issue of drug-pricing legislation in light of the COVID-19 pandemic. Indeed, the CARES Act does not mention drug pricing, although some are calling for Congress to fold drug-pricing measures into any future legislation regarding surprise medical billing and supply-chain issues following the pandemic.5 Similarly, the $3 trillion HEROES Act, recently passed by the House of Representatives, does not take head on the issue of drug pricing.6 Notably, however, on May 8, 2020, the U.S. Department of Health and Human Services finalized rules that allow commercial insurance plans to implement so-called "copay accumulators," which exclude manufacturer copay coupons (and similar programs) from counting towards the insured's cost-sharing obligation.7 These final rules permit states to make a different policy choice and prohibit or limit copay accumulator programs, which may prompt other states to follow prior action by Virginia and West Virginia to limit the practice.
White & Case's Pharmaceuticals & Healthcare Group is tracking and evaluating the impact of these growing complexities on the pharmaceutical industry. To help provide an overview of recent state legislation regarding drug pricing, the state-by-state chart below summarizes important statutory provisions and includes additional information regarding which states have passed certain types of laws, which entities those laws target, and where to look for the language of the statute if a closer review is required.8
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State |
Legislative Target(s) |
Category |
Act Title |
Summary of Law |
Link to Law |
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e.g. Pharmacy Benefit Managers ("PBMs"), Pharmaceutical Company, Pharmaceutical Manufacturers, Pharmacists, Insurers, Canadian Drug Importation |
e.g. Drug Price, Transparency, Drug Affordability Review, Study, Coupons, Licensing, Substitutions |
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Alabama |
PBMs |
Licensing, Drug Price, Transparency |
SB 73: Alabama Pharmacy Benefit Manager Licensure and Regulation Act |
Requires PBMs to register with the Department of Insurance and be licensed by January 1, 2020 to conduct business in the state. Prohibits PBMs from preventing pharmacies and pharmacists from disclosing the amount an individual would pay for a drug without insurance. PBMs may not require a plan member to pay more than either the contracted co-payment amount or the cash retail value, whichever is less. |
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Arizona |
PBMs, Insurers |
Coupons (restricts copay accumulators) |
HB 2166: An Act Relating to Insurance Cost Sharing |
Requires PBMs and Insurers to include in any cost sharing requirement, the amount paid by either the enrollee or another person on behalf of the enrollee (e.g., through a coupon) for drugs 1) without a generic equivalent or 2) where the enrollee has authorization to use drug instead of the generic equivalent. |
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Arizona |
PBMs |
Transparency |
HB 2285: An Act amending Section 20 3321, Arizona Revised Statutes |
Requires PBMs, among other things, to update their maximum allowable cost (MAC) lists in a timely manner, to share with pharmacies the sources used to determine MAC pricing, and to establish an appeal process by which pharmacies can appeal MAC pricing reimbursement. It further bars PBMs from, among other things, prohibiting retail pharmacies from dispensing 90 prescription refills if certain conditions are met, or prohibiting retail pharmacies from offering mail delivery of drugs as an ancillary service. |
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Arkansas |
Pharmacists |
Substitutions (biosimilars) |
HB 1269: An Act to allow Pharmacists to Make Biological Product Substitutions; And for Other Purposes |
Allows pharmacists to substitute an interchangeable biosimilar product under specified circumstances when the substitution would result in cost savings to the patient. Notice to the prescriber of the substitution within five business days is required if requested. |
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Arkansas |
PBMs |
Transparency, Drug Price, PBM Spread Pricing |
Act 994: An Act to clarify the State Insurance Department's Regulatory and Enforcement Authority Concerning Pharmacy Benefit Managers; to Modify Arkansas Pharmacy Benefit Manager Licensure Act; and For Other Purposes |
Amends the required appeal process for pharmacies to challenge plan reimbursements. Directs PBMs to reimburse pharmacies at rates no less than specified benchmarks and limits retroactive and certain other adjustments to pharmacy claims. Prohibits spread pricing by PBMs. Requires PBMs to report certain rebate and other information to the Insurance Commissioner quarterly. |
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California |
Pharmaceutical Manufacturers, Insurers |
Drug Price, Transparency |
SB 17: An Act relating to Health Care |
Imposes several new disclosure requirements, including requiring Insurers to provide annual reports on the 25 most frequently prescribed drugs, the 25 most costly drugs, and the 25 drugs with the highest year-over-year increases in price. It further requires drug manufacturers to provide notice if they intend to introduce a new prescription drug at a cost that exceeds the threshold set out in Medicare Part D to be designated a "specialty drug" under federal law. |
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California |
Pharmaceutical Manufacturers |
Patent Settlement |
AB 824: An Act to add Division 114.01 to the Health and Safety Code, relating to Business |
On October 7, 2019, California became the first state to enact legislation—Assembly Bill 824—rendering certain pharmaceutical patent litigation settlement agreements presumptively anticompetitive. |
Link; see also Link (White & Case's antitrust team outline of potential effects of this law). |
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Colorado |
PBMs |
Transparency |
HB 1078: Pharmacy Benefit Management Firm Claims Payment |
Prohibits PBMs from retroactively reducing payment on a clean claim submitted by a pharmacy. The measure also prohibits a PBM from reimbursing a pharmacy in an amount less than the amount the PBM reimburses any affiliate for the same pharmacy services. |
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Colorado |
Canadian Drug Importation |
Transparency |
SB 19-005: Dr. Irene Aguilar Canadian Prescription Drug Importation Act |
Creates a program to allow the importation of prescription drugs from Canada to Colorado, subject to regulatory oversight and approval from the federal government. |
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Colorado |
Pharmaceutical Manufacturers |
Drug Price, Transparency |
HB 19-1131: An Act concerning a Requirement to Share the Wholesale Acquisition Cost of a Drug when sharing Information concerning the Drug with another Party |
Requires pharmaceutical manufacturers who market to prescribers to disclose a drug's wholesale acquisition cost as well as the names of up to three generic drugs in the therapeutic class, should they exist. |
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Colorado |
Insurers |
Cost Regulation, Drug Price |
HB 19-1216: An Act concerning Measures to reduce a Patient's Cost of Prescription Drugs, and in connection, therewith, making an Appropriation |
Requires Insurers to cap the cost of insulin for covered plan members at no more than US$100 per 30-day supply, regardless of the amount of insulin a patient needs. The Act also requires the Department of Law to investigate insulin prices and present its findings in a report no later than November 1, 2020. |
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Connecticut |
PBMs |
Drug Price, Transparency |
SB 445: An Act concerning Contracts between a Pharmacy and a Pharmacy Benefit Manager, the Bidirectional Exchange of Electronic Health Records and the Charging of Facility Fees by a Hospital or Health System |
Imposes new restrictions on available terms in contracts between PBMs and pharmacies, including 1) PBMs may not prevent pharmacists from disclosing the costs of alternative medication, and 2) PBMs cannot require an individual to pay an amount that would exceed the individual's copayment for the medication, the allowable claim amount for the medication, or the amount the individual would pay without insurance. |
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Connecticut |
PBMs, Health Carriers, Pharmaceutical Manufacturers |
Transparency |
HB 5384: An Act concerning Prescription Drug Costs |
Creates a number of new reporting requirements, including that (1) beginning March 1, 2021, PBMs must file an annual standard-form report outlining, among other things, the dollar amounts of all rebates received from pharmaceutical manufacturers concerning drug formularies managed by the PBM, and (2) pharmaceutical manufacturers of pipeline drugs that, according to Office of Health Strategy's study and annual reports starting from March 1, 2020, may have a significant impact on state expenditures for outpatient prescription. The standard form must lay out, among other things, all factors that caused the increase in the wholesale acquisition cost of the relevant outpatient prescription drugs, and aggregate research and development costs as well as such other capital expenditures. The law also requires the Insurance Commissioner to publish an annual report including a statement disclosing whether, and describing the manner in which, health carriers made rebates available to individuals at the point of purchase. |
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Delaware |
PBMs, Insurers |
Drug Price |
HB 24: An Act to amend Title 18 of the Delaware Code relating to Copayment or Coinsurance for Prescription Drugs |
Prohibits Insurers and PBMs from imposing a copayment or coinsurance requirement for a prescription drug that exceeds the price of that prescription drug, the contract price for the drug, or the copayment that would exist notwithstanding this law, whichever is less. |
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Delaware |
PBMs |
Transparency, Drug Price |
HB 194: An Act to amend Title 18 of the Delaware Code Relating to Pharmacy Benefits Managers |
Along with other reporting requirements, this Act requires that PBMs utilize an appeal process for pharmacies to challenge plan reimbursements. |
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Florida |
Pharmaceutical Manufacturers, Canadian Drug Importation |
Importation |
HB19: Canadian Prescription Drug Importation Program |
Creates the program to allow the importation of prescription drugs from Canada to Florida, subject to regulatory oversight and approval from the federal government. |
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Georgia |
Pharmacists |
Other; Patient Data Privacy |
HB 233: Pharmacy Anti-Steering and Transparency Act |
Prohibits pharmacies from sharing patient or prescriber identifying data for any commercial purpose outside the scope of serving patients. |
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Georgia |
PBMs |
Transparency |
HB 323: An Act relating to Regulation and Licensure of Pharmacy Benefit Managers |
Requires PBMs to report annually the total amount of rebates received from pharmaceutical manufacturers that the PBM did not pass on to its clients. |
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Hawaii |
No Recently Enacted Legislation Applicable |
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Idaho |
PBMs |
Legislation, Drug Price |
HB 386: An Act relating to Pharmacy Benefit Managers |
Adds to existing law regulating PBM activities to: prohibit PBMs from limiting pharmacist's ability to provide cost sharing information or clinical efficacy of more affordable alternatives to consumers, provide certain requirements for MAC pricing and appeals, and prohibit the retroactive denial or reduction of a claim in certain instances. |
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Illinois |
PBMs |
Drug Price, Transparency |
HB 465: An Act concerning Regulation |
Provides that a contract between a health insurer and a PBM must: (1) require the PBM to update maximum allowable cost pricing information and maintain a process that will eliminate drugs from maximum allowable cost lists or modify drug prices to remain consistent with changes in pricing data; (2) prohibit PBMs from limiting a pharmacist's ability to disclose the availability of a more affordable alternative drug; and (3) prohibit PBMs from requiring an insured to make a payment for a prescription drug in an amount that exceeds the lesser of the applicable cost-sharing amount or the retail price of the drug. |
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Illinois |
Insurers |
Drug Price |
SB 667: An Act concerning Regulation |
Among other details, this measure provides that insurers must limit the total amount an enrollee is required to pay for insulin to $100 per 30-day supply, regardless of the type and amount needed. It also directs the Department of Insurance to issue a report by November 1, 2020 regarding insulin pricing practices and recommendations to control and prevent overpricing of insulin. |
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Indiana |
PBMs, Insurers |
Drug Price |
HB 1207: An Act to amend the Indiana Code Concerning Professions and Occupations |
Provides that a state employee plan, a health maintenance organization, an insurer, or a PBM may not require a pharmacy or pharmacist to collect a higher copayment for a prescription drug from a covered individual than the health plan provider allows the pharmacy or pharmacist to retain. Requires an insurer to provide 60 days' notice to specified insured consumers and opportunity for appeal, when removing a prescription drug from the insurer's formulary or changing the applicable cost sharing requirements. |
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Indiana |
PBMs, Insurers |
Licensing, Other |
SB 241: An Act to amend the Indiana Code Concerning Insurance |
Prohibits PBMs from reducing pharmacy payments to an effective rate of reimbursement or from reimbursing PBM-affiliated pharmacies at a rate greater than other pharmacies in the PBM's network. Establishes guidelines for how PBMs can set MAC pricing and sets up an appeals process for pharmacies to dispute MAC rates. Requires PBMs to disclose upon request to their health plan customers that actual amounts paid by the PBM to any pharmacy. Creates licensing and reporting requirements for PBMs, including required reporting starting June 1, 2021 of certain rebate and administrative fee information. |
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Iowa |
PBMs |
Transparency |
SF 563: An Act relating to PBMs and Information Related to the Management of Prescription Drug Benefits, and including Applicability Provisions |
Requires each PBM to submit an annual report to the Insurance Commissioner that includes, among other things, aggregate rebate amounts and administrative fees received from prescription pharmaceutical manufacturers and the amount of those rebates and fees that were not passed through to the PBM's health plan clients. |
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Kansas |
No Recently Enacted Legislation Applicable |
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Kentucky |
PBMs |
Other |
SB 50: An Act relating to Pharmacy Benefits in the Medicaid Program and Declaring an Emergency |
Requires the Department for Medicaid Services (the "Department") |
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Louisiana |
Insurer, Pharmacists, PBMs |
Drug Price, Transparency |
HB 436: An Act relative to Coverage of Prescription Drugs |
Prohibits entities that administer prescription drug benefit programs in Louisiana from prohibiting a pharmacist from informing a patient of "all relevant options" and their cost and efficacy. Also prohibits PBMs from reimbursing pharmacies less than the amount paid to the PBM's affiliates for the same service. |
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Louisiana |
PBMs |
Licensing, Drug Price, Transparency |
SB 41: An Act relative to Regulation of PBMs |
Large-scale reform of PBM requirements in Louisiana, which, among other things, requires PBM registration and regulation by certain state agencies and prohibits "spread pricing" without providing the required notice. |
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Louisiana |
Pharmacists, PBMs |
Other |
HB 433: An Act relative to Business Practices of Pharmacists, Pharmacies, and PBMs |
Provides new regulations governing the interactions between pharmacists and PBMs, including prohibiting PBMs from reimbursing its affiliates more than non-affiliated pharmacies and subjecting those who violate the law to actions and penalties provided for in the Unfair Trade Practices and Consumer Protection Law. |
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Louisiana |
PBMs |
Licensing, Coupons |
SB 239: An Act relative to the Medicaid Prescription Drug Benefit Program |
Among other things, this law authorizes the Louisiana Department of Health to remove pharmacy services from Medicaid managed care organization contracts and assume direct responsibility for such Medicaid pharmacy services. |
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Maine |
Insurers, Pharmacists, PBMs |
Drug Price, Transparency |
LD 6: An Act to prohibit Insurance Carriers from Charging Enrollees for Prescription Drugs in Amounts that Exceed the Drugs' Costs |
Prohibits Insurers or PBMs from requiring a copayment or other charge that exceeds the claim cost of a drug. It further prohibits Insurers or PBMs from penalizing pharmacists for disclosing costs or efficacy information to patients. |
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Maine |
Pharmaceutical Manufacturers |
Drug Price, Transparency |
LD 1162: An Act to further Expand Drug Price; Transparency |
Manufacturers must provide annual drug price reports to the Maine Health Data Organization. The annual reports must notify the Organization if the manufacturer has 1) increased the wholesale acquisition cost of a brand-name or generic drug by more than 20%; or 2) introduced a new drug for distribution that has a cost greater than the threshold for being designated a "specialty drug" under Medicare Part D. If the Organization requests information relating to a specific prescription drug, the manufacturer must provide the Organization with the price per unit within 60 days. Failure to comply can result in monetary fines. Effective January 30, 2020. |
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Maine |
Pharmaceutical Manufacturers |
Importation |
LD 1272: An Act to increase Access to Low-cost Prescription Drugs |
Provides for the Department of Health and Human Services to adopt rules to work to establish a program to import Canadian drugs. By May 1, 2020, the Department will submit a request for approval of the drug importation program to the Federal Department of Health and Human Services. Effective January 1, 2020. |
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Maine |
N/A |
Drug Affordability Review |
LD 1499: An Act to establish the Maine Prescription Drug Affordability Board |
Establishes the Maine Prescription Drug Affordability Review Board, which is authorized to determine spending targets on certain specific drugs that may cause affordability challenges to enrollees in a public payor health plan and provide a number or other broad powers including the ability to establish a common formulary for all public payers, enter into bulk purchasing agreements, and negotiate certain rebate amounts. |
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Maine |
Pharmaceutical Manufacturers |
Drug Price, Transparency |
LD 1406: An Act to promote Prescription Drug Price; Transparency |
Empowers the Maine Health Data Organization to develop a plan to collect data from manufacturers related to the pricing of drugs. |
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Maine |
PBMs |
Licensing, Other |
LD 1504: An Act to protect Consumers from Unfair Practices Related to Pharmacy Benefits Management |
Prohibits "spread pricing" by PBMs absent notice to the State. Requires PBMs to have a license to operate in the state and to apply a single maximum allowable cost list. Effective January 1, 2020. |
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Maine |
Insurers |
Other |
LD 1928: An Act to prohibit Health Insurance Carriers from Retroactively Reducing Payment on Clean Claims Submitted by Pharmacies |
Prohibits insurers (or their intermediaries) from charging a pharmacy or holding a pharmacy responsible for any fee related to a clean claim that is not apparent at the time the claim is processed, that is not reported on the remittance advice, or that is applied after the initial claim is adjudicated. |
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Maine |
Insurers |
Drug Price |
LD 2096: An Act to save Lives by Capping the Out-of-pocket Cost of Certain Medications |
Restricts insurers providing prescription insulin drug coverage from imposing any deductible or other cost-sharing requirement that results in out-of-pocket costs that exceed $35 per prescription for a 30-day supply, regardless of the amount of insulin needed to fill the enrollee's insulin prescriptions. |
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Maryland |
Pharmaceutical Manufacturers |
Drug Price |
HB 631: An Act concerning Public Health-Essential Off-Patent of Generic Drugs- Price Gouging- Prohibition |
This price gouging law would have prevented manufacturers from implementing "unconscionable" price increases on certain drugs. In 2018, a Federal appellate court held the law is unconstitutional because it regulated commerce outside of Maryland's borders. Leave to appeal to the Supreme Court of the United States was denied in February 2019. |
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Massachusetts |
N/A |
Drug Affordability Review, Transparency |
H 4000: An Act Making Appropriations for the Fiscal Year 2020 for the Maintenance of the Departments, Boards, Commissions, Institutions and Certain Activities of the Commonwealth, for Interest, Sinking Fund and Serial Bond Requirements And for Certain Permanent Improvements |
Among other provisions, this law requires certain pharmaceutical manufacturers to disclose certain information regarding drug prices, price increases, and research and development spending to the Executive Office of Health and Human Services. Based on the submitted information, the Executive Office of Health of Human Services may identify and negotiate supplemental rebates for drugs with total annual costs exceeding certain thresholds. If a supplemental pricing rebate is not agreed on, the Manufacturer may be subject to further disclosure requirements. |
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Michigan |
PBMs |
Drug Price, Other |
SB 139: Appropriations; health and human services; department of health and human services (provide for fiscal year 2019-2020) |
Starting February 1, 2020 this law prohibits the Department of Health and Human Services from entering into contracts with Medicaid managed care organizations that use PBMs that fail to utilize certain reimbursement methodologies and fail to agree to move transparent pass-through pricing. |
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Minnesota |
PBMs |
Licensing, Substitutions |
SF 278: An Act relating to Health Care |
Requires PBMs to be licensed to operate in the State; to report information regarding aggregate pharmaceutical manufacturer rebates, retained rebates, spread pricing, and other information to the Commissioner of Commerce; and to provide pharmacies certain information regarding the development of maximum allowable cost lists. This bill also permits pharmacists, with respect to a prescription not covered by the consumer's prescription drug plan, to dispense a therapeutically equivalent and interchangeable prescribed drug that is covered, pursuant to certain conditions and requirements. |
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Minnesota |
Insurers |
Drug Price |
SB 12: Omnibus Health and Human Services Appropriation Bill |
Appropriations bill with a number of detailed limitations, such as limiting cost sharing on insulin and regulating the sale of medical cannabis. |
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Minnesota |
Pharmaceutical Manufacturers |
Drug Price |
HF3100: Alec Smith Insulin Affordability Act |
Obligates pharmaceutical manufacturers to make insulin available to eligible individuals, who urgently need insulin or require access to an affordable insulin supply. |
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Mississippi |
No Recently Enacted Legislation Applicable |
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Missouri |
No Recently Enacted Legislation Applicable |
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Montana |
PBMs, Insurers |
Transparency, Drug Price |
SB 270: An Act revising Conditions for a Network Pharmacy or Pharmacist |
Imposes a prospective requirement that regulated entities (e.g., PBMs) provide pharmacies with their maximum allowable price list at the time of contracting and prohibits regulated entities from penalizing pharmacies for sharing reimbursement information with patients. |
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Nebraska |
PBMs, Insurers |
Drug Price, Transparency |
LB 316: A Bill for an Act relating to Pharmacy; to adopt the Pharmacy Benefit Fairness Act |
Prohibits regulated entities (e.g., Insurers) from requiring a point-of-sale payment in excess of either the non-insured cash cost or the patient's contractual payment, whichever is less. Further prohibits penalizing pharmacies for disclosing cost related information to patients. |
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Nevada |
PBMs |
Drug Price, Transparency |
AB 141: An Act relating to Pharmacy Benefit Managers |
Prohibits a PBM from preventing a pharmacy from disclosing less expensive options to patients and from penalizing a pharmacy for selling a less expensive generic drug to patients. |
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Nevada |
Pharmaceutical Manufacturers |
Drug Price, Transparency |
SB 262: An Act relating to Prescription Drugs |
Extends certain reporting requirements for the sale of diabetes treating drugs to treatments for asthma. |
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Nevada |
PBMs |
Transparency, Drug Price |
SB 378: An Act relating to Prescription Drugs |
This law alters a number of existing provisions related to PBMs, including altering the standard governing a PBM's contractual relationship from a fiduciary standard to a good-faith standard. It further alters how the state operates its Medicaid program by allowing the Department of Health and Human Services to contract with a PBM for the administration of the State Plan for Medicaid and the Children's Health Insurance Program. |
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Nevada |
Pharmacists, PBMs, Pharmaceutical Manufacturers |
Drug Price, Transparency |
SB 539: An Act relating to Prescription Drugs |
Creates a number of new reporting requirements related to the sale of drugs treating diabetes. |
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New Hampshire |
PBMs |
Drug Price |
SB 226: An Act relative to Registration of PBMs, and reestablishing the Commission to study greater Transparency in Pharmaceutical Costs and Drug Rebate Programs |
Creates a number of requirements for PBMs, including that PBMs must register to operate within the state and provide a process for pharmacies to appeal disputes regarding maximum allowable cost pricing. |
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New Jersey |
Pharmaceutical Manufacturers |
Transparency |
S 2389: An Act concerning the Disclosure of Prescription Drug Price Information |
Requires the Board of Pharmacy to establish a prescription drug pricing disclosure website and requires pharmaceutical manufacturers in the state to provide the current wholesale acquisition price for drugs or biologics marketed in the state. |
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New Jersey |
PBMs, Insurers |
Drug Price |
SB 2690 An Act concerning Pharmacy Benefits Managers |
Prohibits regulated entities (e.g., PBMs) from requiring a point-of-sale payment in excess of either the non-insured cash cost or the patient's contractual payment, whichever is less, and prohibits penalizing pharmacies for disclosing cost-related information to patients. |
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New Mexico |
Canadian Drug Importation |
Drug Price |
SB1: An Act relating to Health; enacting the Wholesale Prescription Drug Importation Act; providing Power and Duties; creating a Program; creating a Committee; requiring Federal Certification; creating a Fund; declaring an Emergency |
This measure requires the Department of Health to design a wholesale prescription drug importation program that complies with federal requirements. |
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New Mexico |
Pharmaceutical Manufacturers, PBMs, Pharmacists |
Drug Price |
SB 131: An Act relating to Procurement |
This law established the "Interagency Pharmaceuticals Purchasing Council" to study, review, and coordinate ways to manage drug costs through group purchasing and other means. |
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New Mexico |
PBMs |
Drug Price, Transparency, Volume Purchasing |
SB 415; An Act relating to Health Care |
Creates a number of requirements for PBMs, including that PBMs must be licensed to operate within the state and provide a process for pharmacies to appeal disputes regarding maximum allowable cost pricing. |
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New Mexico |
Insurers |
Drug Price |
HB 292: Prescription Drug Cost Sharing |
Requires insurers to cap the total amount an insured individual is required to pay for prescription insulin drugs at $25 per 30-day supply, regardless of the amount, or the number of prescription drugs or types of insulin prescribed. It also requires the superintendent of insurance to study the cost of prescription drugs for New Mexico consumers and make recommendations on increasing accessibility of prescription drugs in a report to be issued no later than October 1, 2020. |
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New York |
N/A |
Transparency |
SB 7506: A Budget Bill |
Directs the Department of Health to remove Medicaid pharmacy benefits from the managed care benefit package and provide those pharmacy benefits under the fee for service program to ensure transparency and efficiency of services. It also empowers the Superintendent of Insurance to investigate certain prescription drug price increases of more than 50% over a 12-month period and provide such information to the newly created drug accountability board, which is authorized in certain instances to evaluate and report to the Superintendent on (among other things) a drug's impact on premium costs, affordability, and price compared to therapeutic benefit. It also caps cost sharing for prescription insulin at $100 for a 30-day supply regardless of the amount of insulin needed to fill the prescription. |
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New York |
PBMs |
Drug Price, Transparency |
SB 1507: An Act to amend the Public Health Law, in relation to extending and enhancing the Medicaid Drug Cap and to reduce unnecessary Pharmacy Benefit Manager Costs to the Medicare Program |
Prohibits PBMs in the Medicaid program from retaining any portion of spread pricing and requires the registration of PBMs. |
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North Carolina |
Pharmacists, PBMs |
Drug Price, Transparency |
HB 466: An Act relating to the Regulation of Pharmaceutical Benefit Managers |
Imposes new requirements on the interactions between PBMs and pharmacists, including that 1) PBMs cannot prohibit pharmacists from providing cost share information to the patient or penalize a pharmacist for selling lower-priced drug to the patient if available, and 2) PBMs may not charge a co-payment greater than the total charge submitted by the pharmacy for the drug. |
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North Dakota |
No Recently Enacted Legislation Applicable |
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Oklahoma |
PBMs |
Drug Cost, Transparency |
HB 2632: Patient's Right to Pharmacy Choice Act |
Prohibits restrictions on a patient's right to choose a pharmacy provider without paying a penalty and creates an advisory committee to review complaints and administer fines. |
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Oregon |
Pharmaceutical Manufacturers, Insurers |
Drug Price, Transparency |
HB 4005: An Act relating to the Price of Prescription Drugs |
Imposes a number of new reporting requirements on pharmaceutical manufacturers, including annual reports on certain factors regarding the manufacturer's price increases for drugs that cost US$100 or more for a one-month supply and that increase in price by more than 10%. The law further requires that Insurers report information regarding their 25 most costly drugs. |
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Oregon |
Pharmacy Benefits Managers |
Drug Price, Transparency |
HB 2185: An Act relating to PBMs; Creating New Provisions; and Amending ORS 735.530 and 735.534 |
Prohibits PBMs from requiring a prescription to be filled by a mail order pharmacy as a condition for reimbursing the cost of the drug. The law does, however, allow a PBM to require a prescription for a specialty drug to be filled at a specialty pharmacy as a condition for reimbursement of the cost of the drug. It further prohibits PBMs from restricting or penalizing network pharmacies for disclosing the difference between the out-of-pocket cost for the drug and the pharmacy's retail price for the drug. |
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Pennsylvania |
No Recently Enacted Legislation Applicable |
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Rhode Island |
No Recently Enacted Legislation Applicable |
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South Carolina |
PBMs |
Licensing, Transparency |
S 359: An Act to amend the Code of Laws of South Carolina, 1976 |
Establishes a State licensing requirement for PBMs and imposes a number of limitations on PBM operations. The law prevents PBMs from limiting the health care information pharmacists can provide to patients (i.e., information the pharmacists deem appropriate and within the scope of practice); prohibiting pharmacist from discussing certain cost information regarding drugs; or collecting a copay that exceeds the total contracted price, or the amount an individual would pay if that individual was paying cash, for the drugs, among other things. |
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South Dakota |
PBMs |
Drug Price |
HB 1137: An Act to revise certain Provisions regarding Pharmacy Benefit Managers |
Limits a PBM's ability to contract for certain terms, such as to charge a patient an amount that exceeds the amount retained by the pharmacist. |
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Tennessee |
PBMs |
Drug Price |
HB 786: An Act to amend Tennessee Code Annotated, Title 56, Chapter 7, Part 31, relative to pharmacy benefits managers |
Limits a PBM's ability to contract for certain terms, such as terms that would require a pharmacist to dispense a product contrary to the pharmacist's professional judgment, and prohibits PBMs from reimbursing pharmacies less than the amount reimbursed to the PBM's affiliate entities. |
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Texas |
Pharmaceutical Manufacturers, PBMs |
Drug Price, Transparency |
HB 2536: An Act relating to Transparency related to Drug Costs |
Requires pharmaceutical manufacturers to provide reports of certain price increases for drugs which have a cost of at least US$100 for a 30-day supply: Where the increase in price is greater than 40% or more over the previous three years, or greater than 15% over the last year, the manufacturer must provide a report within 30 days of the price change. |
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Utah |
PBMs, Insurers, Pharmacists |
Transparency |
HB 370: Pharmacy Benefit Manager Amendments |
Imposes a licensing and reporting requirement on PBMs and provides certain restrictions on claims reimbursements, as well as a prohibition on PBMs charging insured consumers costs sharing that exceeds the allowed claim amount, the total pharmacy reimbursement for the drug, or the retail price for the drug if not insured. |
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| Utah | Insurers | Coupons, Cost Sharing | HB 207: Insulin Access Amendments |
With some exceptions, requires health benefit plans to cap the total amount that an insured is required to pay for insulin at an amount not to exceed $30 per 30-day supply, regardless of the amount of insulin needed and whether the insured has met her deductible. |
Link |
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Utah |
PBMs |
Transparency, Cost Sharing |
HB 272: Pharmacy Benefit Amendments |
Amendments to the Pharmacy Benefit Act prevent PBMs from retroactively denying or reducing a pharmacy's claim and contracting with a health insurer in certain instances unless the pharmacy benefit manager agrees to regularly report to the insurer detailed, claim-level information regarding pharmaceutical manufacturer rebates received by the PBM in connection with the contract. The Prescription Drug Price Transparency Act, among other things, requires manufactures to report certain information if the wholesale acquisition cost for a drug increases by 10% in one calendar year or 16% across two calendar years, including information regarding the factors that lead to the increase, recent FDA approvals, recent patent expirations, and certain R&D cost information. It also direct insurers to report certain information their 25 highest spend drugs. |
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Utah |
PBMs |
Drug Price |
SB 138: Pharmacy Benefit Revisions |
Among other provisions, this measure prohibits PBMs from charging an enrollee, who uses an in-network retail pharmacy that offers delivery or mail order services, a fee or copayment that is higher than the fee or copayment the enrollee would pay if the enrollee used an in-network retail pharmacy that does not offer delivery or mail-order services. |
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Vermont |
Pharmaceutical Manufacturers |
Drug Price, Transparency |
SB 216: An act relating to Prescription Drugs |
Authorizes the Vermont Attorney General to require manufacturers to provide justifications for price increases where the State spent "significant health care dollars" and where the wholesale acquisition cost of a drug has increased by a certain amount (by 50% over the last five years or by 15% over the last 12 months). |
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Vermont |
Pharmaceutical Manufacturers, Pharmacists, Insurers |
Drug Price, Transparency, Substitutions |
S 92: An Act relating to prescription Drug Price; Transparency and cost containment |
Imposes a number of requirements on different entities within the healthcare sector, including requiring pharmacists to select the lowest priced interchangeable biological product unless otherwise instructed by the prescriber (or the purchaser, if they agree to pay the extra cost). It further requires insurers to provide a report on the costs associated with covering prescription drugs and the year-over-year increases in drug prices. The law places varying reporting requirements on Insurers based upon the number of individuals they insure. |
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Vermont |
Pharmaceutical Manufacturers |
Importation |
S 175: An Act relating to the Wholesale Importation of Prescription Drugs |
Directs the Agency of Human Services to design a program for wholesale importation of prescription drugs from Canada in compliance with all applicable federal standards. |
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Vermont |
Pharmaceutical Company (Wholesalers) |
Drug Price |
H 542 (Act 72): An Act relating to making Appropriations for the Support of Government. |
Directs the Agency of Human Services to extend the deadline by which the Agency of Human Services must implement a wholesale drug importation program. |
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Virginia |
Insurers (third-party administrators) |
Drug Price, Transparency |
HB 29: A Budget Bill |
Requires the Department of Human Resource Management to include language in all contracts with third-party administrators to maintain policies and procedures for transparency in pharmacy benefit administration programs. |
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Virginia |
Insurers |
Drug Price |
HB 66: An Act relating to Health Insurance; Pharmacy Benefits; Cost-Sharing Payments for Prescription Insulin Drugs |
Caps cost-sharing payments for prescription insulin drugs at $50 for 30-day supply of insulin. |
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Virginia |
PBMs |
Drug Price, Cost Sharing |
SB 568: An Act relating to Medical Assistance Services; Managed Care Organization Contracts with Pharmacy Benefit Managers; Spread Pricing |
Prohibits PBMs that contract with Medicaid managed care organizations from using spread pricing. |
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Virginia |
Insurers |
Coupons, Drug Price |
S 1596: An Act to amend and reenact §§ 38.2-4214 and 38.2-4319 of the Code of Virginia |
Requires any insurance carrier in Virginia to count any payments made by another person on the enrollee's behalf, including payments through prescription drug coupons, toward a patient's out-of-pocket maximum cost sharing requirement for plans created or extended after January 1, 2020. |
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Washington |
Pharmaceutical Manufacturers, PBMs, Insurers |
Drug Price, Transparency |
HB 1224: An Act relating to Prescription Drug Cost Transparency |
Imposes a number of new reporting requirements on pharmaceutical manufacturers, PBMs, and Insurers related to price increases, prescription frequency, and reimbursement amounts. |
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Washington |
PBMs |
Drug Price, Transparency |
SB 5601: An Act relating to Pharmacy Benefit Managers |
Requires PBMs to obtain a license and prohibits PBMs from reimbursing a pharmacy or pharmacist in the state an amount less than the amount the PBM reimburses an affiliate for providing the same services. |
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| Washington | Pharmaceutical Companies, Insurers |
Drug Price | HB 2662: An Act reducing the Total Cost of Insulin |
Creates the Total Cost of Insulin work group, which must submit a report to the governor and legislature detailing strategies to reduce the cost of and total expenditures on insulin for patients, carriers, and the state. This measure also requires health plans to cap cost-sharing for insulin at $100 per 30-day supply. |
Link |
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Washington |
Insurers |
Drug Price |
HB 6087: An Act relating to Cost-Sharing Requirements for Coverage of Insulin Products |
Caps the total amount than an insured individual is required to pay for insulin at $100 per 30-day supply and allows health plans to raise the cost-sharing amount for a 30-day supply by $5 for every $100 increase in the cost of an insulin product to the health plan. |
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West Virginia |
PBMs, Insurers |
Drug Price |
HB 2770: A BILL to amend the Code of West Virginia, 1931 |
Effective January 1, 2020: When an insured's contributions to an applicable cost-sharing requirement is calculated (e.g., an out of pocket maximum), the Insurer and PBM must include the cost sharing amounts paid by the insured or on behalf of the insured by another person. |
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West Virginia |
Pharmaceutical Manufacturers, Insurers |
Transparency |
SB 689: An Act relating to enacting the Requiring Accountable Pharmaceutical Transparency, Oversight, and Reporting Act |
Requires drug manufacturers to submit an annual report to the auditor with regard to brand and specialty drugs with a wholesale acquisition cost of at least $100 and an increase of 40% or more over the preceding three years or 15% of more in the previous year, including information regarding the factors that lead to the increases, recent patent expirations and certain R&D cost information. It also directs insurers to report certain information for their 25 most frequently prescribed drugs. |
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West Virginia |
PBMs, Insurers, Pharmaceutical Manufacturer |
Transparency |
SB 489: An act amending the Pharmacy Audit Integrity Act |
Requires licensure of PBMs. |
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West Virginia |
Insurers |
Drug Price |
HB 4543: An Act relating to Insurance Coverage for Diabetics |
Caps the total amount that a carrier can required a covered patient with diabetes to pay for a 30-day supply of insulin at $100, regardless of the quantity or type of insulin needed to fill the person's needs. Also prohibits a manufacturer, wholesaler, or PBM from passing through the costs of the prescribed insulin to the pharmacist or pharmacy. |
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Wisconsin |
No Recently Enacted Legislation Applicable |
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Wyoming |
PBMs |
Transparency |
HB 63: An Act relating to Regulation of PBMs under the Insurance Code |
Precludes PBMs from prohibiting or penalizing a pharmacy or pharmacist for informing a covered person about alternatives that may cost less than paying for a prescription drug using the person's prescription drug insurance. |
Constantin Nuernberger (Law Clerk, New York, White & Case) contributed to the development of this publication.
1 Nicholas Florko, "State legislatures are lapping the federal government on drug pricing — even amid the coronavirus," STAT+ (Apr. 14, 2020), Link.
2 Rutledge v. Pharmaceutical Care Management Association, No.18-540 (2020), which is currently pending before the Supreme Court, presents the question whether Arkansas's maximum allowable cost appeal law regulating PBM drug-reimbursement is preempted by ERISA.
3 See "Prescription Drug Wholesale Acquisition Cost (WAC) Increases," OSHPD (Apr. 2020), Link; see also Ed Silverman, "California fines more than a dozen drug makers for not providing drug pricing data," STAT+ (Apr. 28, 2020), Link.
4 See, e.g., Zachary Brennan, "Nevada Fines Drugmakers $17M for Failing to Comply With Drug Pricing Law," Regulatory Focus (Oct. 4, 2019), Link.
5 Brandon Lee, "HEALTH CARE BRIEFING: Drug Pricing Efforts on Post-Crisis Agenda," Bloomberg (May 4, 2020), Link.
6 See Alex Ruoff, "Democrats Punt on Drug-Pricing Overhaul in Virus Relief Measure," Bloomberg (May 13, 2020), Link.
7 "Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2021; Notice Requirement for Non-Federal Governmental Plans," Department of Health and Human Services, Link (implementing 45 C.F.R. 156.130(h)).
8 The chart includes enacted state laws that place reporting requirements or regulations on pharmaceutical manufacturers or may have an effect on the cost of prescription drugs in the pharmaceutical distribution and payment chain. The chart is not a comprehensive list of all laws in the pharmaceutical industry. The laws surveyed are current through the first week of May 2020.
This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.
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