States are advancing legislation to restrict how pharmacy benefit managers operate. In doing so, they are targeting practices such as steering patients to PBM-owned pharmacies, spread pricing, and opaque rebate arrangements that critics say inflate drug costs while squeezing independent pharmacies. The push spans every region, and it is happening at the state and federal levels.
Notable recent moves by state
Arkansas has gone the furthest of any state. It passed House Bill 1150, the first state law to ban PBM ownership of pharmacies; it had been set to take effect Jan. 1, 2026. However, a federal judge issued a preliminary injunction on July 28, 2025 — citing potential violations of the Commerce Clause and conflicts with federal programs such as Tricare — after CVS Caremark, Express Scripts and OptumRx sued to block it. The case is now before the 8th Circuit Court of Appeals.
California’s law took effect Jan. 1, 2026; it prohibits PBMs from using spread pricing and requires them to use a pass-through pricing model. PBM compensation is limited to flat management fees not tied to drug prices, and PBMs may not discriminate against nonaffiliated pharmacies or require patients to use only affiliated pharmacies when nonaffiliated options are in-network. Patient cost-sharing is capped at no more than the actual rate paid by the plan.
Colorado passed a “delinking” law in 2025, House Bill 1094 that prohibits PBM compensation from being tied to drug prices and transitions PBMs to a flat-fee model. It is the only state to adopt this approach so far. The law takes effect in 2027.
Illinois Gov. J.B. Pritzker signed the Prescription Drug Affordability Act on July 1, 2025, prohibiting PBMs from directing patients to pharmacies they own, banning spread pricing, and creating a $25 million annual grant program to support independent pharmacies funded by a tax on PBMs. Florida served as an early model: Gov. Ron DeSantis signed the Prescription Drug Reform Act in May 2023, banning clawbacks, mail-order rebates, spread pricing, patient steering, and pharmacy networks composed solely of affiliate pharmacies — applying to all employer-sponsored drug coverage in the state.
North Carolina passed the SCRIPT Act in 2025 and it took effect in February 2026. It requires PBMs to allow any pharmacy to participate in their networks, permit patients to use their pharmacy of choice, pass on most negotiated savings to patients, and reimburse independent pharmacies more fairly. The law also gives the state Department of Insurance stronger enforcement authority.
Iowa enacted Senate Bill 383 in 2025, requiring PBMs to reimburse pharmacies at the national or state average drug acquisition cost and prohibiting cost-sharing structures that favor large pharmacy chains over independents.
Alabama passed the Community Pharmacy Relief Act on April 15, 2025, banning PBM steering to affiliated pharmacies and spread pricing practices. The legislation followed a statewide pharmacist walkout organized by the Alabama Pharmacy Association to pressure lawmakers.
Tennessee lawmakers have approved legislation prohibiting a company from simultaneously owning a pharmacy and operating a PBM or health insurer in the state, with the bill now on Gov. Bill Lee’s desk for consideration. However, CVS warned the measure could close more than 130 pharmacies and eliminate more than 2,000 jobs, and said it may challenge the law in federal court. Supporters point to a 2024 audit from the Tennessee Department of Commerce and Insurance finding CVS Caremark used spread pricing — charging some plans more for medications than pharmacies were reimbursed. Mr. Lee has not indicated whether he will sign the bill.
Kansas passed the Kansas Consumer Prescription Protection and Accountability Act in February; it establishes a comprehensive framework governing PBM practices, including bans on spread pricing and point-of-sale fees.
The legal complication states are watching
The U.S. Supreme Court declined to review a 10th Circuit decision that struck down portions of Oklahoma’s PBM law, ruling it conflicted with federal statutes regulating Medicare and employer-sponsored health plans. The Pharmaceutical Care Management Association warned similar laws in Iowa and Arkansas could face the same challenges — and Minnesota is already in court over it, with employers challenging two provisions of the state’s PBM law on ERISA preemption grounds, which remains the central legal battleground for any state trying to reach self-insured employer plans.
Despite that uncertainty, political will continues to build: 45 state attorneys general backed PBM transparency measures in April, a signal that the appetite for reform is not slowing regardless of courtroom outcomes.
Federal backdrop
All of this state activity accelerated partly because Congress was slow to act, but that changed in early 2026. Six national pharmacy organizations backed the Consolidated Appropriations Act of 2026 as the first major PBM reform in Medicare Part D in nearly 20 years. The legislation — signed by President Donald Trump on Feb. 3 — prohibits PBM compensation from being tied to drug list prices, requires PBMs to pass through 100% of rebates to employer health plans, mandates semiannual reporting on net drug spending and spread pricing arrangements. Beginning in 2029, it also requires any willing pharmacy to be able to participate in Part D networks.
Pharmacist groups applauded the reforms while noting they represent one part of a broader effort still needed.
On the enforcement side, the FTC reached a settlement with Express Scripts in February, forcing an overhaul of its compensation, pricing and transparency policies tied to alleged insulin price inflation. The agency remains in litigation against CVS Caremark and OptumRx over similar allegations.
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