New PBM Laws Seek to Protect Independent Pharmacies but Could Raise Costs, Limit Patient Access

While emerging state legislation targeting pharmacy benefit managers (PBMs) may offer benefits for independent pharmacies, experts noted during a session at the Academy of Managed Care Pharmacy (AMCP) Nexus 2025 meeting in National Harbor, Maryland, that such laws could also drive up costs and limit patient access.1

The Tuesday afternoon session, “State of Flux: The Rapid Rise of PBM Legislation,” featured insights from Terry Talbott, RPh, pharmacy advocate and regulatory consultant at PraeScriptum Advisors, and Alan Pannier, PharmD, MBA, senior vice president of strategy at SmithRx.

PBM legislation is rising nationwide, which experts emphasize could increase costs and hinder patient care. | Image Credit: Polonio Video - stock.adobe.com

Rising State PBM Legislation May Come With Unintended Consequences

Talbott opened the discussion by noting that while PBM legislation has been rising rapidly nationwide, the “atomic bomb” came in January with the introduction of Arkansas House Bill (HB) 1150.2 The bill would prohibit the state Board of Pharmacy from issuing permits to any pharmacy owned by or affiliated with a PBM. She explained that the measure would affect not only traditional retail pharmacies but also those serving long-term care facilities and providing mental health services.1

“The proponents said it was designed to protect patient access, making sure that the local independent [pharmacies] were still able to participate and survive because they were being driven out of business by these companies, and to reduce conflicts of interest,” Talbott explained.

However, she warned that the bill could limit patient access to essential therapies and services. Despite strong opposition, it passed on April 16. A preliminary injunction issued on July 28 has since delayed its implementation, with appeals still pending, including one from the Board of Pharmacy. Talbott noted that many expect the injunction to be upheld, describing the case against the bill as “very strong” given its potential conflicts with several federal laws.

If the injunction is lifted, the law would take effect in January 2026, with enforcement managed by the Board of Pharmacy rather than the Department of Insurance, which typically oversees PBM-related regulations. In the meantime, a rare disease carve-out in the bill, expiring in September 2027, temporarily allows the distribution of limited-use permits for pharmacies to dispense related medications.

Talbott highlighted that Arkansas has sparked a trend, with similar bills introduced in New York, Indiana, Iowa, Tennessee, and Louisiana. However, apart from New York, these states passed legislation without PBM ownership bans; New York is still in limbo as the bill is pending.

Talbott concluded by noting that PBMs are not out of the woods yet, citing rumors of substantial new legislation emerging.

“We expect to see more variation on these in 2026,” she said. “We also have a rumor that Tennessee is going to introduce almost a bigger copy of Arkansas. There’s a rumor that Pennsylvania is going to have them introduced, and it would have been already introduced, because it’s drafted, but we don’t have a budget in Pennsylvania, so bill drafting is at a standstill.”

Navigating the Growing Complexity of PBM Laws Across States

Building off this, Pannier reflected on how the PBM landscape has changed since he entered over a decade ago, when there were few or no state-level regulations.

“We actually joke internally all the time that if we were to try and start a PBM today, because of all the state laws, rising costs, and keeping up with regulatory requirements, it’d be nearly impossible,” he said.

Although Arkansas HB 1150 is drawing the most attention lately, Pannier noted that nearly every state, if not all, has some form of PBM legislation, which he categorized into 5 types. Some states, like Tennessee and West Virginia, have reimbursement requirements mandating minimum payments to pharmacies, often tied to Medicaid pricing, to keep independent pharmacies viable. However, these can raise costs for payers.

Transparency and reporting laws, such as those in Utah, require PBMs to publicly disclose rebates, fees, and pricing to reveal hidden profits, which Pannier highlighted may add administrative complexity. Also, pharmacy access or anti-steering laws ensure independent pharmacies have fair access to PBM networks, preventing PBMs from favoring their own pharmacies, as seen in Iowa.

Additionally, licensing requirements, affecting states like Florida and New York, force PBMs to obtain licenses and comply with state rules, enhancing oversight but creating entry hurdles. Lastly, Pannier explained that some states, like Illinois, impose oversight fees, which are annual or per-member charges that fund regulation but may increase costs and discourage smaller PBMs.

Pannier concluded by reiterating that while these state laws aim to improve transparency, support local pharmacies, and rein in “bad actors,” they often have unintended consequences, including higher administrative costs passed to employers or clients, overall health care cost increases for states or employers, and stifled competition.

“From the perspective of someone who works at and runs a mid-size PBM, it's super interesting,” he said. “I can sit back and see the intentions behind these laws, but in some cases, the burdens they create really stagnate competition.”

References

1. Pannier A, Talbott T, Guieb M. State of flux: the rapid rise of PBM legislation. Presented at: AMCP Nexus 2025; October 27-30, 2025; National Harbor, MD.
2. To prohibit a pharmacy benefits manager from obtaining certain pharmacy permits, HB1150 (Ark 2025). Accessed October 30, 2025. https://arkleg.state.ar.us/Bills/Detail?id=hb1150&ddBienniumSession=2025%2F2025R