Gov. Jay Pritzker, D-Ill. Credit: Illinois
Illinois Gov. Jay Pritzker has signed a bill that will establish a broad new framework for pharmacy benefit manager regulation in Illinois.
The new state law, the Prescription Drug Affordability Act, will:
◆ Require PBMs to pass all drug price rebates they negotiate for employers on to the employers.
◆ Prohibit PBMs from steering patients toward preferred pharmacies.
◆ Prohibit "spread pricing," or PBM efforts to capture a share of the difference between the price a plan gets for a drug and the price the pharmacy gets.
◆ Require PBMs to file annual reports.
◆ Subject PBMs to plan audits and market conduct exams.
The new Illinois law will apply directly only to employers that use fully insured health coverage.
The new law exempts employers' self-insured health plans and other types of plans that might be subject to the provision in the Employee Retirement Income Security Act of 1974 that preempts state efforts to regulate large self-insured employer plans and multistate self-insured employer plans.
Some provisions in the new PBM law take effect immediately, and some will take effect Jan. 1, 2026.
Pritzker — a Democrat who is sometimes mentioned in discussions about officials who could run for the Democratic presidential nomination in 2028 — said in an announcement of the bill signing that the Illinois health care system has been infected by "profit-seeking middlemen and predatory actors."
"The bills I signed today are another step toward quality and affordable health care for all by lowering costs for families and providing transformational relief to those who need it most," Pritzker said.
The National Community Pharmacists Association hailed the bill as an example of a state working to "rein in PBMs and end their abusive conduct."
PBMs, health plans and some employers have argued that some PBM regulation requirements could hurt PBMs' successful efforts to hold down employers' and plan participants' prescription drug costs and limit other benefit market players' profit margins.
The new law is part of a wave of PBM legislative activity at the state level.
Related: Illinois lawmaker seeks more oversight of pharmacy benefit managers, with new bill
The Iowa governor recently signed an Iowa PBM regulation bill into law. A major PBM regulation bill in California recently passed in the state Senate and is now under consideration in the state Assembly.
Other Illinois benefits legislation: Prizker also signed the Healthcare Protection Expansion Act bill.
Provisions in the new law:
◆ Require health insurers to pay patients for travel expenses when the patients need to get care away from home because they have inadequate provider networks near their homes.
◆ Prohibit health insurers from including expenses such as executive bonuses and costs related to wellness apps when calculating their medical loss ratios. The federal Affordable Care Act now requires that insurers meet minimum MLR standards, meaning that they must spend a minimum amount of revenue on health care and care quality improvement efforts.
◆ Ban care prior authorization reviews for patients facing mental health crises.
Like the new PBM law, the health care protection law exempts employers' self-insured plans.
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