Recent
California enacts SB 41, targeting pharmacy benefit manager practices to lower drug costs, boost transparency, and set new rules for prescription pricing and oversight.
October 30, 2025
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Pixabay / fernandozhiminaicela
Major Changes for Pharmacy Benefit Managers
New Requirements and Bans
Spread pricing is prohibited: PBMs can't charge health plans more for a drug than they reimburse pharmacies (Keenan briefing).
Rebates must go to health plans: PBMs must pass all manufacturer rebates to payers, ending opaque profit-taking.
Anti-steering rules: Patients gain more pharmacy choice; PBMs are barred from limiting them to PBM-owned pharmacies.
Effective Dates
New contracts: Most major provisions start January 1, 2026. Existing contracts: Spread pricing ban applies fully by January 1, 2029 (Official bill text).
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Unsplash / National Cancer Institute
Transparency and Oversight Measures
Enforcement and Financial Controls
Licensing required for PBMs: All PBMs must be licensed and report finances to California's Department of Managed Health Care (Governor's press release).
Attorney General powers: Enforcement includes civil penalties and injunctions for violations.
Fiduciary duty to employers: PBMs now owe a duty to act in best interest of self-insured employer plans.
Management fees only: PBMs' income is restricted to explicit, agreed-upon fees.
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Pixabay / stevepb
California's Law in National Context
Prompted by Federal Inaction
After federal PBM reforms stalled in 2024, California took action. SB 41 is now among the most comprehensive PBM laws nationwide (Health Industry Washington Watch).
Impacts and Future Influence
Broad state trend: More states are considering similar reforms.
Industry-wide adjustments: Health plans, pharmacies, and PBMs must change contracts and operations to comply.
Potential national model: Analysts suggest California's actions could shape federal policy if Congress continues to delay.
How will the spread pricing ban impact patients' out-of-pocket costs?
Banning spread pricing aims to lower out-of-pocket costs for patients by ensuring their cost sharing at the pharmacy reflects what health plans actually pay, not inflated prices set by PBMs.
What are the main differences between fee-for-service and rebate-retention models?
How will the new licensing requirements for PBMs affect their operations?
What are the potential consequences for PBMs that fail to comply with SB 41?
How does SB 41 compare to other state PBM regulations?
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