Pharmacy benefits.

Senators Wiener and Wahab's pharmacy benefits legislation establishes new requirements for Pharmacy Benefit Managers (PBMs) operating in California, prohibiting practices that restrict patient access to prescription drugs or discriminate against non-affiliated pharmacies. The bill mandates that PBMs transition to a passthrough pricing model and derive income solely from management fees rather than spread pricing or other pricing arrangements.

The legislation bars PBMs from requiring patients to use affiliated pharmacies when other in-network options exist or imposing conditions that disadvantage independent pharmacies. It requires that patient cost-sharing amounts cannot exceed the actual rate paid by health plans for prescription drugs. PBMs must direct all manufacturer rebates to health plans specifically to reduce premiums and out-of-pocket costs for plan participants.

Beginning January 2026, contracts between PBMs and health plans cannot authorize spread pricing, where PBMs charge plans more than they pay pharmacies for drugs. Existing contracts with spread pricing provisions must phase out these terms by January 2029. The bill also expands annual reporting requirements, mandating that health plans disclose aggregate rebate amounts, administrative fees, and payments to both affiliated and non-affiliated pharmacies.

The Attorney General gains authority to enforce these provisions through civil penalties ranging from $1,000 to $7,500 per violation and to pursue injunctive relief. The Department of Managed Health Care retains oversight through periodic audits and examinations of PBM operations. Certain entities remain exempt, including collectively bargained Taft-Hartley plans and pharmacy services provided under workers' compensation programs.