Quarterly State-Level Regulatory Update
Current as of October 23, 2025
At the close of the third quarter, 43 states across the U.S. adjourned their general sessions, however some state legislatures remain active, including:
- Massachusetts (adjourns in November)
- Michigan (adjourns at year-end)
- New Jersey (adjourns at year-end)
- North Carolina (adjourns at year-end)
- Ohio (adjourns at year-end)
- Pennsylvania (adjourns at year-end)
- Wisconsin (adjourns at year-end)
The volume of legislation related to pharmacy benefits managers (PBMs) under consideration at the state level continues to increase. As we enter the fourth quarter, more than 1,500 prescription drug benefits-related bills have been introduced this year. Although the majority of these bills have not yet been enacted, and some have stalled or failed, the numbers demonstrate a heightened focus on PBMs by state lawmakers.
So far, the top focus areas this year include:
- Utilization management (>270 bills)
- Coverage requirements (>205 bills)
- Pharmacy reimbursement (>115 bills)
- Pharmacy networks (>85 bills)
- Rebates (>75 bills)
- Spread pricing (>55 bills)
- Copay accumulator programs (>50 bills)
A handful of bills in several states touch on emerging issues:
- Vertical integration: Bills that prevent PBMs from being affiliated with pharmacies or health insurers (>10 bills introduced, one enacted)
- Delinking: Bills that restrict traditional PBM compensation models (>15 bills introduced, one enacted)
Here’s a look at critical state-level legislation that has been enacted, or is pending, at the end of the third quarter.
Bills that were enacted
Alabama SB 252
This bill was signed into law by the Governor on April 15, 2025. Most provisions of the bill became effective immediately, while others, such as the pharmacy reimbursement mandate, became effective October 1, 2025. The Alabama Department of Insurance is in the early stages of developing rules to implement this bill.
Bill Summary
- Imposes any willing pharmacy network requirements
- Mandates reimbursement and dispensing fees equal to the state Medicaid program ($10.64) for community pharmacies
- Requires point-of-sale rebates or pass-through, subject to plan contract requirements
- Prevents spread pricing, subject to plan contract requirements
- Broad anti-steering mandates, subject to plan contract requirements
- Removes self-funded ERISA exemption from current law
- Retains specialty drug exemption from current law
Arkansas HB 1150
Also known as Act 624, this bill was signed into law by the Governor on April 16, 2025. One provision of the law prohibiting PBMs from owning pharmacies is scheduled to become effective January 1, 2026. However, several PBMs and related entities, including Express Scripts, CVS Health, and the Pharmaceutical Care Management Association have filed lawsuits in Arkansas federal court arguing, among other things, that the law violates the Constitution’s Commerce Clause. The plaintiffs in these lawsuits have requested that the court issue an injunction preventing the law from going into effect while the lawsuit is pending.
Bill Summary
- Prevents PBMs and healthcare payers from owning direct or indirect interests in a pharmacy – including mail-order pharmacies – permitted for the retail sale of drugs in Arkansas
Arkansas has also passed other bills, SB 103 and SB 104, that update existing laws related to pharmacy networks and PBM steering practices.
California SB 41
A very broad bill, SB 41, was signed into law by Governor Gavin Newsom on October 11 and is set to take effect January 1, 2026. Previous drafts of the bill included a NADAC plus $10.05-$13.20 (depending on claims volume) dispensing fee reimbursement mandate, but this was amended out of the final bill..
Bill Summary
- Imposes a fiduciary duty requirement on PBMs
- Prohibits spread pricing
- Prohibits affiliate steering
- Requires 100% rebate pass-through to plan sponsors
- Restricts some traditional PBM compensation models
The California governor’s budget trailer bill (AB 116) also includes provisions for additional oversight on PBMs operating in the state.
Colorado HB 1094
This bill was signed into law by the Governor on May 30, and is set to become effective January 1, 2027. Although the bill was amended in the Senate, the delinking and reimbursement mandate provisions were retained in the final version of the bill.
Bill Summary
- Mandates reimbursement at NADAC, plus a “reasonable and adequate” dispensing fee
- Prohibits spread pricing
- Prohibits certain traditional PBM compensation model (Delinking)
Illinois HB 1697
This bill was signed into law by the Governor on July 1, after being pushed through the legislative process in the final three days of the regular session. The $15 covered lives assessment became effective September 1. The bill’s other provisions become effective January 1, 2026.
Bill Summary
- Prohibits spread pricing
- Prevents steering to specific pharmacies
- Requires 100% rebate pass-through to plan sponsors
- Requires PBMs to submit to the Department of Insurance $15 per covered individual (or such other amount as determined by the DOI) enrolled by the PBM in the state starting September 1
Indiana SB 140
The governor signed SB 140 into law on May 6. The final bill does not include language regarding vertical integration, which was included in a previous version, that would have prevented PBMs from holding an ownership interest in a pharmacy. The original pharmacy reimbursement proposal was modified so that reimbursement is based on whether the pharmacy is licensed to sell alcohol. The bill becomes effective January 1, 2026.
Bill Summary
- Imposes any willing pharmacy network mandate
- Requires reimbursement at acquisition cost, plus a “fair and reasonable” dispensing fee for pharmacies not licensed to sell alcohol
- Requires reimbursement at NADAC, plus a dispensing fee equal to the Medicaid rate of $10.48 for pharmacies that are not licensed to sell alcohol
- Prohibits steering to specific pharmacies, but makes an exception for mail-order pharmacies
Iowa SF 383
The governor signed SF 383 into law on June 11, with the vast majority of this broad bill slated to become effective July 1. The prohibition on spread pricing becomes effective January 1, 2026. However, the Iowa Association of Business and Industry took legal action against the bill, citing ERISA preemption and Constitutional violations. On June 30, a federal judge temporarily blocked the bill from going into effect against the plaintiffs. At this time, it is unclear whether the ERISA preemption or Constitutional arguments will ultimately prevail.
Bill Summary
- Imposes any willing pharmacy network requirement
- Prohibits steering and mandatory mail
- Requires parity for retail and mail copay and days’ supply
- Prohibits copay accumulator programs
- Mandates reimbursement at NADAC plus a minimum $10.38 dispensing fee at retail pharmacies, excluding publicly traded pharmacies and pharmacy chains
- Prohibits spread pricing
- Requires 100% rebate pass-through to plan sponsors
Louisiana HB 264
This bill became effective upon signature by the governor on June 11, 2025. However, the bill specifies that NADAC reimbursement will become effective January 1, 2026, and that the spread pricing and rebate pass-through provisions will not be enforced until January 1, 2027.
Bill Summary
- Prohibits steering
- Prohibits spread pricing
- Requires 100% rebate pass-through to plan sponsors
- Mandates reimbursement at NADAC
Maine LD 1580
This bill becomes effective January 1, 2026 and is set to be automatically repealed as of 2031.
Bill Summary
- Prohibits spread pricing
Montana HB 740
HB 740 was signed into law on May 5. Although the bill still contains reimbursement mandates, they were amended from a previous version, which would have required 106% of NADAC plus a dispensing fee as high as $17. The bill goes into effect on October 1, 2025 and includes a sunset provision that terminates the bill on June 30, 2029.
Bill Summary
- Mandates reimbursement at NADAC plus a $15 dispensing fee for independent pharmacies
- Prohibits affiliate steering
- Restrict requirements to use mail-order in the event of delay or USPS delivery limitations
Nebraska LB 198
A substantial amendment to Nebraska’s Pharmacy Benefit Manager Licensure and Regulation Act goes into effect January 1, 2026.
Bill Summary
- Prohibits mandatory use of a mail-order pharmacy, with some exceptions
- Prohibits affiliate steering
- Prohibits spread pricing for new contracts after January 1, 2026. Extensions of previous contracts may use spread pricing until January 1, 2029.
North Carolina SB 479
The senate version (SB 479) of a bill reported in the previous quarterly update (HB 163) passed both chambers and was signed by the Governor on July 9. The bill has staggered effective dates, with some provisions becoming effective on October 1. Other provisions, such as the point-of-sale rebate requirement, go into effect January 1, 2027.
Bill Summary
- Imposes a fiduciary duty requirement on PBMs
- Requires point-of-sale rebates (90% of rebate value)
- Mandates acquisition cost reimbursement for independent pharmacies and other pharmacies located in a “pharmacy desert”
North Carolina remains in session until mid-November so another bill under consideration, HB 163, which prohibits spread pricing, sets minimum reimbursement and dispensing fee mandates, and prevents steering, could still advance.
Bills still in process or introduced
Massachusetts H 1234 (Introduced)
Massachusetts is in session for most of the year, so most bills are early in the process. H 1234 is currently in committee.
Bill Summary
- Requires point-of-sale rebates
- Imposes any willing pharmacy networks mandate
- Prevents steering to affiliated or owned pharmacies
- Prohibits spread pricing
- Imposes a fiduciary duty requirement on PBMs
New Jersey A4953/S 3842 (Introduced)
These companion bills were carried over from 2024 and remain under consideration. The New Jersey legislature is in session all year so there may be significant movement on PBM legislation.
Bill Summary
- Prohibits spread pricing
- Mandates reimbursement at acquisition cost
- Mandates that out-of-network pharmacy use be allowed
- Imposes fiduciary duty requirements on PBMs
- Proposes removing self-funded ERISA plans exemption from current law
Wisconsin AB 173
Wisconsin has a handful of PBM bills in play until year end. Among them is AB 173, which would regulate a number of PBM practices, including dispensing fees and network practices.
Bill Summary
- Prohibits steering
- Requires a dispensing fee at the Medicaid rate ($10-$15 based on claims volume)
Update on ERISA Preemption
Last quarter, we reported that the Supreme Court declined to take up the PCMA v. Mulready case, which means that the Tenth Circuit ruling in favor of PCMA stands. The Tenth Circuit ruled that ERISA preempts Oklahoma’s PBM laws related to pharmacy networks, meaning that Oklahoma is prevented from enforcing these provisions of the law with respect to ERISA plans.
Other litigation remains ongoing related to ERISA preemption that will have broad implications for plans sponsors:
In September, an Illinois federal district judge dismissed a lawsuit filed by a division of the Teamsters which argued that Arkansas Rule 128, which requires self-funded plans to report extensive pharmacy reimbursement data to the state, should be preempted by ERISA based on the Supreme Court’s Gobeille case. As of now, it is uncertain whether the decision will be appealed.
In the Sixth Circuit, Tennessee is appealing a federal district court ruling that ERISA preempts the state’s “any willing provider” laws after a local company, McKee Foods, challenged the law’s application to its self-funded plan.
As noted above, an Iowa business coalition is arguing that ERISA preempts much of Iowa SF 383, which was set to become effective July 1. A federal judge temporarily blocked the bill from being enforced against the plaintiffs while the case unfolds.
There has also been significant activity with state attorneys general on the issue of ERISA preemption. In late September, the Kentucky Attorney General released an opinion that its PBM laws (SB 188), specifically network steering restrictions, are not preempted by ERISA and are enforceable on out-of-state plans with Kentucky residents. Earlier this year, the Texas Attorney General issued a similar opinion. All of these developments are why it is more vital than ever for benefits advisors to remain informed and advocate on behalf of their plans – those with ERISA and non-ERISA plans alike.
Deep Dive: Pharmacy reimbursement mandates
Increasingly, states are introducing legislation aimed at regulating how pharmacy benefits managers (PBMs) pay pharmacies in their network. Generally, these proposals require a minimum drug reimbursement that approximates the pharmacy’s acquisition cost for the drug. Generally, these are equal to the approximate drug acquisition cost for the pharmacy and use the National Average Drug Acquisition Cost (NADAC) published by CMS as a benchmark. Some proposals also require PBMs to pay a minimum professional dispensing fee per claim to the pharmacy, which is typically set at the state’s Medicaid rate.
This table provides an overview pharmacy reimbursement mandates that have been enacted so far.
| State | Drug Reimbursement | Dispensing fee | Limitations | Effective date |
| Alabama | Medicaid rate, Alabama Average Acquisition Cost (AAC) | Medicaid rate, $10.64 | Applies at independent pharmacies | October 1, 2025 |
| Arkansas | NADAC | Must be “fair and reasonable” | N/A | Already in effect |
| Colorado | NADAC | Must be “reasonable and adequate” | N/A | January 1, 2027 |
| Delaware | NADAC | N/A | N/A | Already in effect |
| Georgia | NADAC | $10.50 for chain pharmacies, $11.50 for independent pharmacies | Applies only to state employee plan | January 1, 2026 |
| Indiana | Acquisition cost (licensed to sell alcohol) or NADAC (if not licensed) | Must be “fair and reasonable” (licensed to sell alcohol) or Medicaid rate, $10.48 (if not licensed) | Applies based on whether the pharmacy is licensed to sell alcohol | January 1, 2026 |
| Iowa | NADAC | $10.68 | Applies at retail pharmacies, excluding publicly traded and chains | July 1, 2025 |
| Kentucky | NADAC (except retail chains) | $10.64 | Dispensing fee applies at independent pharmacies | Already in effect |
| Louisiana | NADAC | Dispensing fee required, amount not specified | N/A | January 1, 2026 |
| Montana | NADAC | $15 | Applies at independent pharmacies | October 1, 2025 |
| New Mexico | NADAC | $10.30 | Applies at community-based pharmacies; applicable to plans under the Health Care Purchasing Act | January 1, 2026 |
| North Carolina | Acquisition cost | N/A | Applies to independent pharmacies and in “pharmacy deserts” | October 1, 2025 |
| Tennessee | Actual cost | TennCare rate, $13.16 | Dispensing fee applies at low-volume pharmacies (<65,000 prescriptions annually) | Already in effect |
| West Virginia | NADAC | $10.49 | N/A | Already in effect |
This table is a condensed summary and does not present the full text of the law.
Please note: This summary was drafted for informational purposes only and should not be construed as legal advice. The bills listed above were selected for their potential to have significant impact should they be enacted, and this list should not be interpreted as a comprehensive list of state bills that may impact your plan. Due to the nature of the legislative process, this information is preliminary and subject to change.
