Quarterly State-Level Regulatory Update
Current as of July 11, 2025
At the close of the second quarter, 42 states across the U.S. adjourned their general sessions, however some state legislatures remain active, including:
- California (adjourns in September)
- 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 PBM legislation under consideration at the state level continues to increase. As we enter the third quarter, nearly 1,500 prescription drug benefits-related bills have been introduced so far 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 (>250 bills)
- Coverage requirements (>200 bills)
- Pharmacy reimbursement (>100 bills)
- Pharmacy networks (>75 bills)
- Rebates (>75 bills)
- Spread pricing (>50 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 (19 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 second 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, become 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.
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. While one of its provisions becomes effective September 1, a majority of the bill’s 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. 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
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 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
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, and others going 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.
Oklahoma SB 789
SB 789 became law without the Governor’s signature on May 28. Language that would have required reimbursement at 106% of NADAC plus a $15 dispensing fee was removed from the bill. It becomes effective November 1.
Bill Summary
- Amends pharmacy audit rules
- Amends pharmacy network contracting rules
Bills still in process or introduced
California SB 41 (Passed Senate, pending in Assembly)
A very broad bill, SB 41 passed the California Senate and is now pending in the Assembly.
Bill Summary
- Prohibits spread pricing
- Requires 100% rebate pass-through to plan sponsors
- Restricts some traditional PBM compensation models
- Requires reimbursement at NADAC reimbursement, plus a dispensing fee at the Medicaid rate ($10-$13 based on claims volume)
The California governor’s proposed budget also includes provisions for additional oversight on PBMs operating in the state. For now, it is unclear what impact the proposal, if passed, would have on the viability of SB 41. Last year, the governor vetoed similar PBM legislation (SB 966).
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
Failed Bills
A number of other critical bills failed to become law during the second quarter. Some bills failed to gain enough momentum prior to the end of the legislative session while others were opposed by industry and employer coalitions based on their impact to the prescription drug benefit. They include the following bills.
Minnesota SF 3063/HF 2851
This pair of companion bills failed to advance in the general session which adjourned in mid-May.
Bill Summary
- Prevents spread pricing
- Imposes fiduciary duty requirements on PBMs
- Mandates reimbursement at NADAC
The governor convened a special session of the legislature on June 9 and passed an omnibus health bill that included language prohibiting certain formulary changes. That bill, HF 2, was signed into law by the Governor and we are currently reviewing it to determine impact and applicability.
Missouri SB 45
As of the close of Missouri’s ordinary session in mid-May, SB 45 had failed to advance.
Bill Summary
- Prohibits copay accumulator programs
- Imposes fiduciary duty requirements on PBMs
- Prohibits spread pricing
Nevada SB 316
Although an amended version of this bill passed the state assembly, the session adjourned in early June before amendments could be approved in the senate. Nevada’s legislature does not reconvene until 2027.
Bill Summary
- Prohibits steering
- Imposes any willing pharmacy network requirement
- Imposes fiduciary requirements on PBMs
- Mandates reimbursement at acquisition cost
New York A 5882
Similar to proposals defeated in previous years, this A 5882 had failed to move forward by the close of the session in mid-June.
Bill Summary
- Mandates that reimbursement be the greater of NADAC or acquisition cost
- Mandates a dispensing fee equal to the state’s $10.18 Medicaid rate
Another vertical integration bill – A 6546 – which would have required PBMs to divest any ownership interests in pharmacies is still under consideration but failed to move forward.
Oregon HB 3212
This bill did not advance out of committee before the legislature adjourned on June 2.
Bill Summary
- Bans on spread pricing
- Mandates a minimum dispensing fee of $9.80-$14.30
- Requires reimbursement at NADAC
- Imposes any willing pharmacy network requirements
House Bill 2252, which would have prohibited PBMs from being affiliated with a health insurer, also failed to advance out of committee prior to the deadline.
South Carolina SB 342
South Carolina’s legislature adjourned for the year on May 28 without passing any PBM rules. SB 342 did not make it out of committee before the deadline.
Bill Summary
- Mandates a dispensing fee mandate equal to the state’s Medicaid rate of $10.50
- Imposes an additional enhanced dispensing fee of $7.00 for low-volume pharmacies – those dispensing fewer than 65,000 prescriptions annually
- Mandates reimbursement at 104% of NADAC
Texas SB 1122
Despite receiving a favorable report in committee, SB 1122 failed to move forward prior to the session ending on June 2. Although the extension of state PBM laws to self-funded ERISA plans was not codified into law, the Texas attorney general previously issued an opinion in February that state PBM laws were likely not preempted by ERISA. For now, it is unclear how the Texas Department of Insurance will proceed.eration in the Senate.
Bill Summary
- Appears to apply existing PBM regulations to self-funded ERISA plans
- Applies PBM regulations to out-of-state plans with Texas residents
In addition, we were also monitoring priority bills, HB 5457, which would have prohibited PBMs from owning pharmacies, and HB 2978, which would have mandated a dispensing fee of $7-$10. Both bills failed to pass. Texas meets in odd-numbered years, so the regular session of the legislature will not convene again until 2027.
Update on ERISA Preemption
Last quarter, we pointed to the PCMA v. Mulready case pending before the Supreme Court as having the potential to ultimately decide whether states have broad authority to regulate ERISA plans. As of June 30, the Supreme Court declined to take up the 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:
A lawsuit pending in an Illinois federal court argues 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 decision from 2016.
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.
Finally, 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. 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.
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.
