This bill mandates that pharmacy benefit managers and health carriers must utilize any 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 reduced cost that would result from applying the compensation. In such cases, the retained compensation must be used to offset future premiums or costs for covered persons. Additionally, contracts with pharmacy benefit managers for state employee group insurance programs must ensure compliance with these requirements.

The bill also introduces definitions for key terms such as "compensation" and "cost-sharing obligation," and it establishes a reporting requirement for pharmacy benefit managers and health carriers to demonstrate compliance with these provisions starting March 1, 2026. Furthermore, it includes an exception for cases where the covered person's cost-sharing obligation is $25 or less for generic drugs and $55 or less for brand-name drugs. The new regulations are set to take effect on January 1, 2026.