Pharmacy Benefit Managers feel the pain as DeSantis signs new prescription drug regulations into law

by | May 3, 2023

  • Florida lawmakers have approved a bill to regulate pharmacy benefit managers (PBMs) as part of an effort to reduce prescription drug costs.
  • The legislation subjects PBMs to regulation as insurance administrators, regulates their contracts with pharmacy benefit plans and programs, and requires drug manufacturers to notify relevant authorities of planned drug price increases.
  • PBMs and their supporters argue that the legislation will increase costs for patients and employers, while supporters of the bill say it will increase transparency in the prescription drug market and put patients first.

UPDATED Wednesday 5:04pm:

On Wednesday, just hours after receiving the bill from state lawmakers, Florida Governor Ron DeSantis signed SB 1550 into law, placing new restrictions on pharmacy benefit managers (PBMs), often referred to as middlemen in the healthcare system.

The new law will increase transparency and accountability for PBM practices and drug prices in Florida, allowing consumers to make more informed decisions about their health. The PBM industry has claimed that they help to lower prescription costs through negotiating rebates and discounts, while independent pharmacies have argued that PBMs have too much leverage in the market.

The new legislation will give the Office of Insurance Regulation more authority over PBMs, limit the activities of PBMs with affiliated pharmacy businesses, and prevent PBMs from requiring patients to receive prescriptions by mail. The bill passed unanimously in both the Florida House and Senate.


In a controversial move that will increase regulation in the healthcare sector, Florida lawmakers have given unanimous final approval to a bill targeting pharmacy benefit managers (PBMs) as part of a broader effort to reduce prescription drug costs. But opponents, including the PBM’s themselves, say the legislation will only increase costs for their patients. The legislation, SB 1550, has the potential to impact a wide range of interests, including patients, pharmacies, health insurers, drug manufacturers, and employers.

House and Senate leaders touted the legislation late Tuesday, saying the bill will fully regulate PBMs as insurance administrators under the Office of Insurance Regulation, subjecting them to examinations, investigations, and recordkeeping requirements. The legislation also regulates PBM contracts with pharmacy benefit plans, programs, and pharmacies, imposing network standards and prohibiting many current practices. Additionally, drug manufacturers are required to notify relevant authorities of planned drug price increases, making the information publicly available.

“Today, the Florida House passed landmark legislation to rein in the high costs of prescription drugs and increase the accessibility of many life-saving medicines,” said House Speaker Paul Renner. “It answers the concern of Floridians who face the decision of whether to pay for their prescriptions instead of their groceries or housing.”

PBMs serve as intermediaries in the healthcare system, with roles including negotiating drug prices with manufacturers, establishing pharmacy networks, and paying claims. They contract with health insurers, self-insured employers, and governments. Despite the PBM industry’s assertion that it helps lower prescription costs through negotiating rebates with drug manufacturers and discounts from pharmacies, independent pharmacies, which are direct competitors, have long called for changes to PBMs, arguing they wield too much leverage in the market. The PBM’s say that leverage is what helps keep costs lower for their own patients.

“State governments or companies that hire [PBM’s] are trying to balance quality, access, and cost,” said Conner Rose, senior director of state affairs for the Pharmaceutical Care Management Association, a leading PBM trade group. Rose made the comments during a hearing last month. “And the reality is that we don’t live in the Garden of Eden, and you can’t necessarily have all three. So these people that hire us can sort of pull levers of the pool of services we offer them to offer [the most] affordable, cost-effective, [and] robust benefits to their employees as possible.”

Rose pointed out that that PBMs are hired by employers to negotiate drug prices and develop pharmacy networks. He expressed concern about the legislation leading to “unintended consequences down the line that would result in higher plan costs for employers (and) their employees, who would see those increases in higher premiums, diminished benefits.”

But Florida Gov. Ron DeSantis has repeatedly expressed support for PBM reform, noting in his State of the State address in early March that Floridians are adversely affected by inflated prescription drug prices due to pharmacy middlemen. DeSantis called for greater transparency in the system, stating, “We need reform of the PBMs.”

The approved bill goes beyond the current law requiring PBMs to register with the state Office of Insurance Regulation and contracts between PBMs and insurers to include limits on patient cost-sharing for drugs. The new legislation expands the Office of Insurance Regulation’s authority over PBMs, subjects them to regulation as insurance “administrators,” takes steps to prevent so-called “spread pricing,” where PBM’s receive reimbursement for at one price from insurers or employers, while paying pharmacies a lower price to dispense the drug. But the practice is how all businesses, not just PBMs, make a profit. The legislation also places restrictions on PBMs with affiliated pharmacy businesses, and prevents PBMs from requiring patients to receive prescriptions by mail.

The bill’s supporters argue these changes will increase transparency in the prescription drug market, leading to more competitive pricing practices and an improved free market. House sponsor Linda Chaney compared PBM operations to a “black box” and said the bill addresses PBMs doing business with affiliated companies, which can lead to conflicts of interest.

“Today, we stood firm and clearly said ‘enough is enough’ to powerful PBMs,” Chaney said, “putting patients with cancer, diabetes, Parkinson’s disease and other chronic illnesses above profit.”

Previously, the Florida Senate passed legislation introduced by Sen. Jason Brodeur, which required PBMs to obtain a certificate of authority for an administrator under the Florida Insurance Code. The bill also mandated that manufacturers disclose significant wholesale acquisition cost increases and implemented anti-steering measures.

“For patients, I cannot tell you what a difference this is going to make in transparency in the ability to get their prescriptions where they choose to get them,” said Senate sponsor Gale Harrell.

“For far too long, PBM middlemen have manipulated Florida’s health care system, restricting patients’ access, driving up drug costs, and threatening pharmacies,” said National Association of Chain Drug Stores (NACDS) President and CEO Steven C. Anderson. “With the unanimous passage of this legislation today, lawmakers have sent a clear message that they are putting Florida patients first.”

DeSantis is expected to sign the legislation once the bill is formally sent to his desk. The legislative session is scheduled to end on Friday, May 5th.


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