Comment letter supports stronger disclosure requirements for PBMs, seeks clarity that proposed rule doesn’t preempt state PBM transparency laws 

OAKLAND — California Attorney General Rob Bonta today co-led a bipartisan coalition of 45 attorneys general in submitting a comment letter supporting a proposed U.S. Department of Labor (Department) rule that would require greater transparency from pharmacy benefit managers (PBMs) that service employer-funded health plans covered under the Employee Retirement Income Security Act of 1974 (ERISA). Created in the late 1960s to process prescription drug claims, PBMs now play a far broader and more powerful role in the health care system by managing prescription drug benefits for health insurers. This includes, among other things, negotiating rebates and reimbursements with drug manufacturers and determining which drugs are covered and at what cost. Approximately 136 million Americans receive health coverage through an employer — either their own job or a family member’s — and the proposed rule responds to concerns that employers often lack visibility into how PBMs are making money or why drug costs change. It would require PBMs to disclose twice a year how they generate revenue and would give employers the right to audit them. PBMs have also long sought to avoid state regulation by claiming federal preemption under ERISA. The attorneys general urge the Department to clarify that the proposed rule does not preempt state PBM transparency laws.

“PBMs have significant control over prescription drug pricing and coverage decisions, yet too often operate without transparency or accountability,” said Attorney General Bonta. “This proposed rule is an important step toward greater transparency in how PBMs operate across the country. In addition, my fellow attorneys general and I call on the Department of Labor to ensure that any final rule fully respects and preserves the ability of states to enforce their own laws designed to protect consumers from unfair and abusive PBM practices.”

Further, in the comment letter, the attorneys general ask the Department to clarify that it supports working with them to enforce the rule. According to the coalition, there should be mention that nothing in the rule is intended to prevent the Department from referring matters to state attorneys general, requesting their investigative or enforcement assistance, or coordinating with them when the Department discovers violations of state law.

Today, the top three PBMs manage approximately 80% of prescription drug claims. Due to the power imbalance held by PBMs and the negative effects of such power on drug pricing, all fifty states, the District of Columbia, and Puerto Rico have enacted laws to rein them in. Common provisions include limits on patient out-of-pocket costs, bans on “gag clauses” that prevent pharmacists from telling patients they could save money by paying for their prescription out of pocket instead of using insurance, and protections against unfair treatment of independent pharmacies. For example, California law requires PBMs, upon request, to disclose detailed financial information for each health plan or employer they serve, including drug costs, rebates, fees, and pharmacy payments. This helps clarify the true cost of prescription drugs and how money is distributed among PBMs, insurers, drug companies, and pharmacies.

Attorney General Bonta co-led today’s comment letter along with the attorneys general of Minnesota, Ohio, and Oklahoma. They are joined by the attorneys general of Alaska, American Samoa, Arizona, Arkansas, Colorado, Connecticut, Delaware, the District of Columbia, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, and Wyoming.