California Weighs Regulation of Pharmacy Benefit Managers

Article excerpt

The California legislature is grappling with the regulation of pharmacy benefit management companies, or PBMs. A bill being considered by a joint state assemblysenate reconciliation committee would bring PBMs under state supervision for the first time. The bill would also require pharmacists who are promoting drug switches for health plans or program administrators to disclose all financial incentives related to substituting one drug product for another.

"PBMs are a largely unregulated industry that has a tremendous impact on health care," said John Cronin, v.p. of the California Pharmacists Association. "At present, there is no agency to take patient, pharmacist, or physician grievances because PBMs aren't regulated."

The bill, AB 1136, is sponsored by the California Medical Association. The CMA initially wanted to ban financial incentives for pharmacists who promote drug switches for health plans. The bill's authors changed the original ban to full disclosure and added PBM oversight after consultation with CPhA.

"The real concern is that the consumer and the physician know that there is a financial incentive involved" when a health plan or PBM pharmacist proposes a switch, said a source close to the bill's author, Assemblywoman Valerie Brown (D).

Brown's bill sailed through the state assembly, but ran into substantial opposition in the state senate. …