Massachusetts has passed a new state law that requires pharmacy benefit managers (PBMs) to get a license from the Massachusetts Division of Insurance no later than January 1, 2026. Initial PBM licenses are good for three years and are renewable in subsequent three-year increments. Both initial and renewal licenses come with a $25,000 fee.
The new state law also establishes significant penalties for PBMs in certain circumstances. PBMs that fail to obtain or renew state licenses as required, violate other state PBM laws, cause multiple consumer complaints, or commit fraud are all subject to punishment by state insurance regulators. For instance, a PBM that operates without the requisite license or violates other state PBM laws is subject to a $5,000 per day fine.
Additionally, brokers or consultants who help health benefit plan sponsors engage the services of PBMs cannot receive payments from the PBMs, which might create a conflict of interest. The state insurance commissioner determines which kinds of PBM payments might create impermissible conflicts of interest.
Furthermore, the legislation created a state office of pharmaceutical policy and analysis. The purpose of the office is to collect and publish data on prescription drug prices and related information. Health insurers now must cover certain medications for diabetes, asthma, and some heart conditions, with no cost-sharing for generic drugs and cost-sharing under $25 for a month's supply of specified brand-name drugs.
In addition to Massachusetts, the states of Minnesota, New York, Utah, and West Virginia require state PBM licensure. Pennsylvania recently enacted a broader law aimed at PBM regulation, and the Illinois state legislature is considering a similar bill.
The National Association of Chain Drug Stores praised the Massachusetts bill but called for additional restrictions on PBMs. The Pharmaceutical Care Management Association, the PBM trade group, commented that drug manufacturers and pharmacies oppose PBMs because of their success in lowering prescription drug prices.
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