California May Regulate and Restrict Pharmaceutical Brokers to Combat Rising Drug Costs
California's Push for Pharmaceutical Broker Regulation
California may regulate pharmaceutical brokers, specifically pharmacy benefit managers (PBMs), as part of an initiative led by Governor Gavin Newsom. This decision is crucial as PBMs control around 80% of prescription drug sales in the United States, and their practices have raised concerns among policymakers.
The Critical Role of PBMs
- PBMs have come under scrutiny for allegedly profiting from high prescription costs and not passing discounts to consumers.
- Three major players dominate the PBM market: OptumRx, CVS Caremark, and Express Scripts.
Legislative Changes Ahead for PBMs
The proposed law, championed by state Sen. Scott Wiener, aims to require PBMs to apply for licensing by 2027. A significant aspect of this legislation is the mandate that PBMs must pass along 100% of pharmaceutical manufacturers' rebates to insurers or health plans. This will help ensure that savings are reflected in consumer costs.
Consumer Impact and Market Change
- This law would prohibit PBMs from steering patients to pharmacies they own.
- It would prevent PBMs from offering independent pharmacies lower reimbursements than those provided to major chains.
Proponents believe such regulations can lead to reduced costs for consumers, as evidenced by experiences in other states that have enacted similar licensing requirements.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.