Provides relative to pharmacy benefit managers. (1/1/27) (OR INCREASE SG EX See Note)

Senate Bill 387 amends Louisiana's pharmacy benefit manager regulatory framework by expanding definitions, establishing fiduciary duties, and restricting PBM compensation models. The bill amends R.S. 22:1863 to add or revise definitions for enrollees, healthcare services, pharmacy benefit management fees and services, providers, related entities, and rebates. Most significantly, the bill enacts new R.S. 22:1867.1, which establishes a pharmacy benefit manager's duty of care and good faith and fair dealing to enrollees, health plans, and providers, with priorities favoring enrollees over other parties. The bill prohibits pharmacy benefit managers from retaining rebates and fees, requiring them instead to derive income solely from pharmacy benefit management fees transparently disclosed in contracts. The legislation also repeals R.S. 22:1868.1 and adds a public records exemption to R.S. 44:4.1(B)(11) for confidential audit information.

The practical effects of this legislation extend to pharmacy benefit managers operating in Louisiana, health insurance issuers and health plans contracting with PBMs, pharmacies and pharmacists providing prescription drugs, and enrollees receiving pharmaceutical benefits. Health insurance issuers and the Louisiana Commissioner of Insurance gain authority to audit PBMs once annually to verify compliance with transparency and compensation restrictions. Pharmacy benefit managers face significant compliance obligations including transparent disclosure of all revenue sources, elimination of spread pricing practices, and detailed contract specifications of compensation arrangements. Violations carry substantial penalties: civil monetary penalties of $25,000 per violation with no aggregate cap, and suspension or revocation of a PBM's license if violations are not corrected within thirty days of notice. Enrollees, health plans, and providers gain standing to bring civil actions against PBMs for breaching these fiduciary duties.

This legislation operates within Louisiana's existing insurance regulatory structure under Title 22 of the Louisiana Revised Statutes, which governs health insurance and pharmacy-related matters. The bill's expansion of PBM definitions and duties integrates with the Commissioner of Insurance's existing authority to regulate health insurance issuers and PBMs under the state's insurance code. The creation of fiduciary duties with private rights of action complements the commissioner's administrative enforcement powers. The compensation restrictions directly address spread pricing, a practice where PBMs retain margins between amounts paid to pharmacies and amounts charged to insurers. The law operates to the extent permissible under applicable federal law, acknowledging potential interactions with federal pharmacy benefit manager regulations and employee benefit plan laws that may occupy certain regulatory space.