Pharmacy benefit management.

Assembly Member Bonta's pharmacy benefit management legislation establishes new fiduciary responsibilities and transparency requirements for pharmacy benefit managers (PBMs) operating in California's healthcare system. The bill requires PBMs to remit all manufacturer rebates and discounts to health plans for reducing enrollee premiums and out-of-pocket costs, while prohibiting revenue from spread pricing practices.

Under the measure, PBMs must submit detailed annual reports beginning in 2026 on their 100 most costly, frequently prescribed, and highest-revenue drugs. These reports will include comprehensive data on pharmacy reimbursements, manufacturer rebates, administrative fees, and contractual relationships with affiliated entities. The Department of Managed Health Care will compile this information into public reports analyzing PBMs' market impact and value to consumers, while keeping company-specific data confidential.

The legislation also expands PBM registration requirements to include disclosure of ownership interests and affiliated organizations. PBMs must notify health plans of potential conflicts of interest and can only charge service fees reflecting fair market value for actual services performed. The department will have authority to inspect and audit PBM compensation arrangements to ensure compliance with these provisions.

For health plans contracting with PBMs, the bill mandates verification that PBMs meet registration requirements, maintain fiduciary duties aligned with state and federal law, and inform pharmacists of their rights to file complaints. The measure aims to increase transparency in prescription drug pricing while protecting proprietary business information through specified exemptions from public records requirements.