What's Happening?
A new California law, SB 41, which imposes fiduciary duties on pharmacy benefit managers (PBMs), is being challenged in court by the Pharmaceutical Care Management Association (PCMA). The law, enacted in October 2025, requires PBMs to act in the interests
of their clients and disclose all commissions and conflicts of interest. This legislation applies to self-insured employer plans regulated under the federal Employee Retirement Income Security Act (ERISA). PCMA argues that the law intrudes on federally regulated health insurance plans and is preempted by ERISA. The lawsuit, filed in the US District Court for the Central District of California, claims that the law transforms PBMs from nonfiduciary administrators into fiduciaries, which could lead to costly changes in business practices and increased litigation risks.
Why It's Important?
The outcome of this legal challenge could have significant implications for the healthcare industry, particularly in how PBMs operate within the regulatory framework. If the law is upheld, it could set a precedent for other states to impose similar fiduciary duties on PBMs, potentially leading to increased transparency and accountability in the management of prescription drug plans. However, it could also result in higher operational costs for PBMs, which might be passed on to consumers in the form of higher drug prices. The case highlights the ongoing tension between state and federal regulations in the healthcare sector, as well as the broader debate over the role of PBMs in controlling drug costs.
What's Next?
The legal proceedings will continue as the court evaluates the arguments presented by PCMA and the state of California. The decision could prompt further legislative or regulatory actions at both the state and federal levels. Stakeholders, including employers, healthcare providers, and patients, will be closely monitoring the case, as its outcome could influence future policy decisions regarding the regulation of PBMs and the broader healthcare market.
