Q&A: Why Enforcement Is the Weak Link in State PBM Reform | NCPA 2026

State laws aimed at reining in pharmacy benefit managers (PBMs) have multiplied since the Supreme Court’s 2020 Rutledge decision, but according to pharmacy law experts, passing a law and enforcing it are 2 very different things.

“The problem with PBM bills in many states is that yes, they get passed. Yes, there's a lot of fanfare; legislators are happy to have passed it [and] pharmacies are happy to have seen it passed,” AJ Barbarito, Esq, senior associate in Frier Levitt’s Life Sciences Litigation practice group, told Drug Topics®. “But they may lack in an enforcement mechanism, a devoted channel for the pharmacy to send a complaint to the state.”

In part 1, Barbarito explored some of the ongoing developments across pharmacy and PBM relationships that could impact the fabric of the future of pharmacy reimbursement in the US. This time around, he discusses some of the ongoing PBM reform narratives across the 50 US States, from Arkansas to Oklahoma and the various pharmacy protections lawmakers have been after.

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Drug Topics: How effective have state reimbursement protections been in practice?

AJ Barbarito: I have seen some of them be effective, where they're enforceable and where they're actually enforced. Rutledge was an important Supreme Court case that essentially saved the Arkansas Act 900 [of 2015] reforming PBMs, saying that the Employee Retirement Income Security Act (ERISA) statute did not preempt most of these reforms. It gave a lot of states a roadmap to enact PBM reforms in the face of ERISA preemption. [Since] then, there have been some effective laws. There have been some that haven't escaped ERISA preemption. There are some laws where part D preemption comes into effect. And there are historical laws that were out there before the Rutledge ruling came out that haven't really been changed since and so are still essentially preempted by ERISA. There are limitations to what can be done under ERISA. But that's kind of the preamble to [the state protections].

Some of the things that I've seen working [are] reimbursement floors, where PBMs have to pay at least the cost of acquisition. I have been seeing PBMs working to be compliant with those state laws; frankly, in many cases without state action being needed necessarily. They have been, in many cases, at least trying to be compliant with those laws where they believe that the laws are not preempted. There have been maximum allowable cost (MAC) transparency and update requirements. I have seen those actually working, being effective. I have seen in many of those states PBMs actually updating their MAC lists on a regular basis in conformance with the law and being more transparent about how those MAC prices came to fruition. Audit practice limits; a lot of states have put in audit reforms. It's not necessarily the same as reimbursement, but audit reform does tend to work and PBMs tend to be compliant with those.

The problem with PBM bills in many states is that yes, they get passed. Yes, there's a lot of fanfare; legislators are happy to have passed it [and] pharmacies are happy to have seen it passed. But they may lack in an enforcement mechanism, a devoted channel for the pharmacy to send a complaint to the state. If they do send a complaint to the state, they may lack any personnel who are actually dedicated to resolving those complaints. Sometimes when personnel do look at it and they reach out to the PBM, then they accept the answer from the PBM and that's it. There's not a lot of digging there or adversarial investigation or quasi-litigation.

The fact is with PBM regulation, if it is relegated to just the Department of Insurance, just the attorney general, [and] there’s no private right of action for the pharmacy to pursue its own relief under the statute, then you’re at the mercy of those things. You’re at the mercy of the agency actually deciding to do something, the agency actually fielding complaints, period, and then going through the entire adversarial process with the PBM. It can be incredibly frustrating there. That’s one of the reasons why state reimbursement protections can be iffy. It’s a mixed-bag. So yes, I have seen relief happen. Arkansas is a great example where a law protecting reimbursement rates has gone into effect, and PBMs tend to be complying with it. But I’ve seen plenty of instances in other states where there doesn’t seem to be compliance or an appetite towards enforcement.

With respect to preemption, [let’s talk] about that for a second. We discussed Rutledge [v Pharmaceutical Care Management Association (PCMA)]. The limiting factor on Rutledge [was] the case PCMA v Mulready that came out of the 10th Circuit in 2023, and the Supreme Court denied cert on that, [which] right now signals the high watermark for Rutledge. ERISA does preempt provisions that dictate network structure or benefit administration. In that sense, any willing provider laws, preferred network terms, mail-order incentives; those are the things that got struck down in the Oklahoma law. Yes, rate and pricing mechanics survive in state legislation, [but] anything telling a plan how it needs to build its network, what pharmacies it needs to include, etc, or its benefit [design], won’t. And that hurts because, while it is great for a pharmacy to be able to receive a reasonable reimbursement, if it has no access to a large volume of beneficiaries, then it can’t necessarily access the kind of business that it needs.

Part D preemption is a big issue. Part of that Mulready case struck down the Oklahoma law based on Medicare Part D [and] said, if you’re talking about Part D claims, then that is solely the federal government’s, and basically CMS’, wheelhouse. We are working on Part D reform, and that goes back to the request for information (RFI) that I briefly touched on. I really think that the biggest problem here for state law is the issue of enforcement. And me as a lawyer—yes, plenty of people, I’m sure, could take a cynical view that I want to see a private right of action, because of course I do; I’m a lawyer. I want to be able to go and sue PBMs, which is the case. But the reason that I want to be able to do that is because that is the best way for relief. It is the best and most inexpensive way for the state to provide that [because] no tax dollars need to go to me to pursue these claims.

As opposed to where you’re leaving it in the hands of an agency, [where] you need to then dedicate state resources to that agency to actually enforce. If you can allow pharmacies to enforce the law themselves, then you’re going to see more change. You’re going to see more compliance with the law, in my opinion.

Drug Topics: In the reimbursement space, which entities, pharmacies or PBMs, are expected to make the greatest operational changes going forward, as statutes take place and industry developments unfold?

AJ Barbarito: The PBMs think it should be pharmacies; that pharmacies should bear the full brunt of reducing the cost of pharmaceuticals. That's just an unrealistic and unfair view of things. I do think that the public, seen through legislators, believes that it should be on PBMs; that PBMs need to make major operational changes and that PBMs are not necessarily going to make as much money as they have in the past, nor should they, in my opinion. They have to accept that. That's what the legislation is there to do and to change.

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