SACRAMENTO, Calif. — California Gov. Gavin Newsom will soon decide whether the most populous U.
S. state will join 25 others in regulating the middlemen known as pharmacy benefit managers, or PBMs, whom many policymakers blame for the soaring cost of prescription drugs. This story also ran on .
It can be . PBMs have been under fire for years for alleged profiteering and anticompetitive conduct, but efforts to regulate the industry at the federal level have stalled in Congress. The three largest PBMs are owned by insurers and retail pharmacy chains, and of prescription drug sales in the United States are controlled by them: OptumRx, owned by UnitedHealth Group; CVS Caremark, owned by CVS Health, which also owns the insurer Aetna; and Express Scripts, owned by The Cigna Group.
The , spearheaded by state Sen. Scott Wiener of San Francisco, a Democrat, would require PBMs to apply for a license by 2027 and would mandate that licensed PBMs pass along 100% of pharmaceutical manufacturers’ rebates to health plans or insurers. Drug companies often offer substantial discounts on medications to boost demand, and one of the major criticisms of PBMs is that they pocket rebates rather than pass savings along to customers.
The law would also mostly bar PBMs from steering patients to pharmacies they own, which includes the major mail-order pharmacies. And it would prohibit them from giving independent pharmacies lower insurance reimbursements than they offer the big chains — a major iss.