Advocacy in action

CVS Health is always working to protect our clients’ ability to design pharmacy benefits that meet the needs of their business and their plan members. We’re pleased to provide these insights into the status of bills at the federal and state levels affecting pharmacy benefits, and hope you find them informative.

Federal legislative update

Pharmacy benefits bill S. 1542 may advance in Senate committee

The Senate Health Education Labor and Pensions (HELP) Committee may have plans to consider S. 1542 as part of a larger health package in September. This legislation would fundamentally change the way commercial PBM contracts are constructed by eliminating the value-based arrangements between any related business entities – in this case, CVS Caremark, CVS Retail, CVS Specialty, and CVS Mail. Many client contracts rely heavily on these arrangements to reduce costs for their employees’ drug benefits.

The legislation may also prohibit any type of rebate guarantees between CVS Caremark and clients, which are the hallmark of all PBM contracting. This ban on many traditional contracting methods currently used by plan sponsors will remove the flexibility they currently enjoy in making arrangements with PBMs that work best for them and their members.

State legislative update

More than 800 state bills related to pharmacy benefits have been introduced in 2024 to date. Many of these bills aim to limit plan sponsors’ ability to provide quality, affordable prescription drug benefit plan designs, including preferred, mail, and specialty networks. 

Priority PBM legislation and regulation: Active

As of July 10, CVS Health is monitoring the below bills of highest priority, which would be the most harmful for plan sponsors and members:

California SB 966 (may be interpreted to apply to wide variety of plan sponsors, including self-funded ERISA plans)

• Prohibits certain price- and rebate-based compensation structures for how plan sponsors compensate pharmacy benefit managers
• Prohibits spread pricing arrangements between PBMs and plan sponsors
• Restricts ability of plan sponsors to require patients to use certain lower-cost pharmacies, including home-delivery services
• Restricts ability of plan sponsors to require use of certain high-quality, affordable specialty pharmacies

Ohio HB 505 (some provisions may be interpreted to apply to wide variety of plan sponsors, including self-funded ERISA plans)

• Implements per-prescription dispensing fee to be paid to pharmacies; amount to be based on OH Medicaid rate, which varies based on pharmacy volume but is currently expected to range from $8.30 to $15.47
• Restricts ability of plan sponsors to require or incentivize patients to use certain lower-cost pharmacies, including home-delivery services
• Restricts ability of plan sponsors to require use of certain high-quality, affordable specialty pharmacies

If the legislation is passed, actual impacts will depend on finalized language as well as the regulator’s application. Plan sponsors are encouraged to seek their own legal counsel.

Numerous pharmacy benefit bills that would have had dramatic negative impacts for plan sponsors and members were defeated this year, including:

• Alabama HB 238
• Georgia HB 924
• Illinois HB 4548
• Iowa HF 2401, HF 2473
• Maryland SB 626
• Mississippi HB 1265
• Missouri HB 1627
• Nebraska LB 990
• North Carolina HB 246
• Oklahoma SB 1955, HB 3368
• Rhode Island H 7139
• Virginia HB 1136, HB 1006
• Wisconsin SB 737/AB 773
• Wyoming HB 173

Priority pharmacy benefit legislation: Passed

Strong coalition and employer/union engagement made a difference in the few bills that did pass and were ultimately signed into law this year. Many of these bills were significantly mitigated to lessen impacts on plan sponsors.

• Alaska HB 226
• Idaho HB 596
• Kentucky SB 188
• Louisiana SB 444
• Oklahoma SB 1670
• Oregon HB 4149
• Pennsylvania HB 1993
• Washington SB 5213

Other priority legislation

In addition to bills aimed at minimum pharmacy reimbursements, dispensing fees, and network design restrictions, other legislation is pending that would impact pharmacy benefit offerings. These bills include restrictions on step therapy and prior authorization processes, as well as mandates on how clinician-administered specialty drugs must be obtained whether for administration in the hospital, clinic, or home setting. 

There is other state legislation that would mandate how rebates are used (e.g. passed through to the client or to the member at the point of sale), and/or would prohibit traditional spread pricing arrangements with clients when they are contracting for certain PBM services.

Our focus remains on preserving options for our clients and ensuring they continue to have flexibility to contract for pharmacy benefit services and to design pharmacy benefit programs using models that best meet their needs.