SB 41: Pharmacy benefits.

Official summary

Legislative Counsel’s Digest (official, as of the latest version). Written by nonpartisan legislative staff; reproduced verbatim.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes a willful violation of the act a crime. Existing law provides for the regulation of health insurers by the Department of Insurance. Existing law requires a pharmacy benefit manager engaging in business with a health care service plan or health insurer to secure a license from the Department of Managed Health Care on or after January 1, 2027, or the date on which the department has established the licensure process, whichever is later.

This bill would prohibit a pharmacy benefit manager from, among other things, requiring use of only an affiliated pharmacy, as specified, and from imposing requirements, conditions, or exclusions that discriminate against a nonaffiliated pharmacy in connection with dispensing drugs. The bill would limit a pharmacy benefit manager’s income to that derived from a pharmacy benefit management fee for pharmacy benefit management services provided, and would require a pharmacy benefit manager to use a passthrough pricing model. The bill would authorize the Attorney General to recover specified civil penalties and receive equitable relief for violations of the pharmacy benefit manager licensing provisions. Because a violation of these provisions would be a crime, the bill would impose a state-mandated local program. The bill would also require a contract between a health insurer and a pharmacy benefit manager issued, amended, or renewed on or after January 1, 2027, or the date on which the Department of Managed Health Care has established the pharmacy benefit manager licensure process, whichever is later, to require the pharmacy benefit manager to be licensed and in good standing with the Department of Managed Health Care.

Existing law requires a health care service plan contract or health insurance policy that provides coverage for outpatient prescription drugs to cover medically necessary prescription drugs and subjects those policies to certain limitations on cost sharing and the placement of drugs on formularies. Existing law limits the maximum amount an enrollee or insured may be required to pay at the point of sale for a covered prescription drug to the lesser of the applicable cost-sharing amount or the retail price, and requires that payment apply to the applicable deductible.

This bill would prohibit a health care service plan contract or health insurance policy issued, amended, or renewed on or after January 1, 2026, that provides prescription drug coverage from calculating an enrollee’s or insured’s cost sharing at an amount that exceeds the actual rate paid by the plan or insurer for the prescription drug, except as specified, and would require the contract or policy to include specified cost-sharing provisions. The bill would prohibit a contract between a pharmacy benefit manager and a health care service plan or health insurer that is executed, amended, or renewed on or after January 1, 2026, from authorizing spread pricing. Because a willful violation of the bill’s requirements relative to health care service plans would be a crime, the bill would impose a state-mandated local program.

This bill would declare that it does not narrow, abrogate, or otherwise alter the authority of the Attorney General to maintain or restore competitive, fair, and honest markets and prosecute violations of law, and would declare that the provisions of this bill are severable.

Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

Sponsors

Sponsors by party (alphabetical): Democratic 6 · Republican 1

“Support” is shown only as formal sponsorship recorded by the legislature. Roll-call votes are available on the official bill page.

Recent official actions

1. October 11, 2025Chaptered by Secretary of State. Chapter 605, Statutes of 2025.
2. October 11, 2025Approved by the Governor.
3. September 17, 2025Enrolled and presented to the Governor at 2 p.m.
4. September 10, 2025Assembly amendments concurred in. (Ayes 40. Noes 0. Page 2819.) Ordered to engrossing and enrolling.
5. September 9, 2025In Senate. Concurrence in Assembly amendments pending.
6. September 9, 2025Read third time. Passed. (Ayes 69. Noes 2. Page 3081.) Ordered to the Senate.
7. September 4, 2025Ordered to third reading.
8. September 4, 2025Read third time and amended.
9. September 3, 2025Read second time. Ordered to third reading.
10. September 2, 2025Read second time and amended. Ordered to second reading.
11. August 29, 2025From committee: Do pass as amended. (Ayes 11. Noes 0.) (August 29).
12. August 20, 2025August 20 set for first hearing. Placed on APPR. suspense file.