This bill mandates that pharmacy benefit managers and health carriers utilize compensation received from drug manufacturers to directly benefit covered persons by reducing their out-of-pocket costs at the point of sale for prescription drugs. Specifically, it requires that all compensation, such as rebates and discounts, be remitted to the covered person unless their cost-sharing obligation is already lower than the adjusted out-of-pocket cost. In such cases, the retained compensation must be used to offset future premiums or costs for covered persons. Additionally, contracts with pharmacy benefit managers under the state employee group insurance program must ensure compliance with these requirements.

The bill also introduces definitions for key terms such as "compensation" and "cost-sharing obligation," and establishes a reporting requirement for pharmacy benefit managers and health carriers. Starting March 1, 2026, these entities must submit annual reports to the commissioner detailing their compliance with the new regulations. The provisions of this bill are set to take effect on January 1, 2026.