Provides relative to pharmacy benefit managers (OR +$15,507,745 SG EX See Note)

HB 938 substantially revises Louisiana's regulation of pharmacy benefit managers by establishing strict income limitations, reimbursement standards, and transparency requirements. The bill amends R.S. 22:1863(11), 1868, and 1868.1, enacts new R.S. 22:1868.2, and modifies R.S. 39:1600.1 to expand the definition of pharmacy benefit managers to include affiliated entities and subsidiaries, requires PBMs to reimburse all pharmacies at not less than the National Average Drug Acquisition Cost plus the Louisiana Medicaid dispensing fee with no variance based on pharmacy type or affiliation, establishes a maximum claim payment error rate of two percent per drug with mandatory appeal processes for pharmacies, and restricts PBM income to flat-fee service payments and flat-dollar performance bonuses while prohibiting income derived from prescription drug pricing, markups, spread pricing, retained rebates, and manufacturer revenues. The bill further requires PBMs to pass through all prohibited income to client health plans quarterly, prohibits formulary designs favoring branded drugs over therapeutically equivalent generics unless the branded drug has a lower net acquisition cost, and prevents charging consumers cost-sharing amounts exceeding the PBM's net acquisition cost.

Affected parties include pharmacy benefit managers operating in Louisiana, which face substantial new compliance obligations and income restrictions; pharmacies of all types that gain guaranteed minimum reimbursement rates and formal appeal rights for underpayment claims; health benefit plans and insurers that receive mandated disclosure of claims-level pricing data and prohibited revenues and benefit from rebate pass-through and lower overall drug costs; Louisiana's insurance commissioner who gains authority to audit PBM certifications and impose civil penalties up to five thousand dollars per prescription claim for violations; and the state's Division of Administration, which must procure PBM services through reverse auction processes and ensure bidder compliance with the new regulatory standards.

The legislation operates within Louisiana's existing insurance regulatory framework under Title 22 of the Louisiana Revised Statutes, specifically the insurance code provisions governing health insurance and unfair or deceptive practices in insurance business. The bill implements compliance requirements effective October 1, 2026, and repeals Section 5 of Act No. 474 of the 2026 Regular Session, modifying prior legislative provisions on this topic. The regulatory structure relies on the commissioner of insurance's existing enforcement authority, enhanced by new civil monetary penalty provisions, and integrates with Louisiana's Medicaid dispensing fee structure as the baseline for reimbursement calculations. The bill addresses constitutional concerns regarding due process by establishing formal appeal mechanisms for pharmacies challenging claim payment errors and requiring transparent written disclosure of fees and revenues in contracts between PBMs and health plans.