Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes a willful violation of the act a crime. Existing law provides for the regulation of health insurers by the Department of Insurance. Existing law requires a pharmacy benefit manager engaging in business with a health care service plan or health insurer to secure a license from the Department of Managed Health Care on or after January 1, 2027, or the date on which the department has established the licensure process, whichever is later.
This bill would prohibit a pharmacy benefit manager from, among other things, unreasonably obstructing or interfering with a patient's right to timely access a prescription drug or device at a contract pharmacy, requiring use of only an affiliated pharmacy, as specified, and from imposing requirements, conditions, or exclusions that discriminate against a nonaffiliated pharmacy in connection with dispensing drugs. The bill would limit a pharmacy benefit manager's income to that derived from a pharmacy benefit management fee for pharmacy benefit management services provided, and would require a pharmacy benefit manager to use a passthrough pricing model. The bill would authorize the Attorney General to recover specified civil penalties and receive equitable relief for violations of the pharmacy benefit manager licensing provisions. Because a violation of these provisions would be a crime, the bill would impose a state-mandated local program.
Existing law requires a health care service plan contract or health insurance policy that provides coverage for outpatient prescription drugs to cover medically necessary prescription drugs and subjects those policies to certain limitations on cost sharing and the placement of drugs on formularies. Existing law limits the maximum amount an enrollee or insured may be required to pay at the point of sale for a covered prescription drug to the lesser of the applicable cost-sharing amount or the retail price, and requires that payment apply to the applicable deductible. Existing law requires a plan or insurer that reports rate information to report specified prescription drug information to the relevant department no later than October 1 of each year.
This bill would prohibit a health care service plan contract or health insurance policy issued, amended, or renewed on or after January 1, 2026, that provides prescription drug coverage from calculating an enrollee's or insured's cost sharing at an amount that exceeds the actual rate paid by the plan or insurer for the prescription drug, except as specified, and would require the contract or policy to include specified cost-sharing provisions. The bill would prohibit a contract between a pharmacy benefit manager and a health care service plan or health insurer that is executed, amended, or renewed on or after January 1, 2026, from authorizing spread pricing. The bill would require a plan or insurer to include additional information in its annual prescription drug data reporting, including the aggregate amount of rebates received by the pharmacy benefit manager for each drug. Because a willful violation of the bill's requirements relative to health care service plans would be a crime, the bill would impose a state-mandated local program.
This bill would declare that it does not narrow, abrogate, or otherwise alter the authority of the Attorney General to maintain or restore competitive, fair, and honest markets and prosecute violations of law, and would declare that the provisions of this bill are severable.
Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.
This bill would make legislative findings to that effect.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

Statutes affected:
SB 41: 1367.243 HSC, 10123.205 INS
12/03/24 - Introduced: 1367.243 HSC, 10123.205 INS
03/17/25 - Amended Senate: 1367.243 HSC, 10123.205 INS
05/01/25 - Amended Senate: 1367.243 HSC, 1385.005 HSC, 1385.005 HSC, 1385.006 HSC, 1385.006 HSC, 10123.205 INS
06/30/25 - Amended Assembly: 1367.243 HSC, 1385.005 HSC, 1385.001 HSC, 1385.001 HSC, 1385.002 HSC, 1385.002 HSC, 1385.004 HSC, 1385.004 HSC, 1385.005 HSC, 1385.005 HSC, 1385.006 HSC, 127672 HSC, 127672 HSC, 127672.9 HSC, 127672.9 HSC, 10123.205 INS
07/09/25 - Amended Assembly: 1367.243 HSC, 1385.001 HSC, 1385.002 HSC, 1385.004 HSC, 1385.005 HSC, 1385.006 HSC, 127672 HSC, 127672.9 HSC, 10123.205 INS
07/17/25 - Amended Assembly: 1367.243 HSC, 10123.205 INS