08-05-2025
NC Senate passes bill to reform prescription drug market, enhance transparency
The North Carolina Senate passed Wednesday, with unanimous support, a bill sponsors say is aimed at leveling the playing field for independent pharmacies and enhancing transparency through new regulations and oversight.
The bill 'is one of the most sweeping reforms with respect to how we regulate the prescription drug market here in North Carolina,' said Sen. Benton Sawrey, a Clayton Republican and a primary sponsor of the bill..
It 'provides us with needed transparency' and 'protects our consumers,' Sawrey said Wednesday.
The House passed its own pharmacy-related bill in late April, which also seeks to reform the industry.
Senate leader Phil Berger said the Senate's bill was 'vetted significantly' by many interests with a stake in the health care industry.
In response to concerns that the bill could lead to increased health care costs, Berger said, 'It's my belief that the Senate approach actually addresses those concerns in a way that should not lead to the kind of cost inflation that the House approach would lead to.'
He said he believed the North Carolina Chamber of Commerce, a statewide business advocacy organization, supports the bill.
Efforts to regulate pharmacy benefit managers, or PBMs, have failed in the past, including a stalled 2023 attempt by Rep. Wayne Sasser, who criticized PBMs for their opaque practices, as reported by The News & Observer.
The House and Senate will need to reconcile their versions of the bill for it to become law — something that has eluded the legislature for years.
On the possibility of a consensus being reached, Berger said it 'remains to be seen.'
'I'm hopeful that we will. I think everybody agrees something needs to be done in that space, and we've just not been able to get something that we can build some agreement on,' he said.
Convoluted industry
The pharmaceutical distribution industry is complex, with numerous players.
In broad terms: Drug manufacturers produce medications and distribute them to wholesalers or sometimes directly to pharmacies. Wholesalers then sell these drugs to various customers, including pharmacies.
Pharmacy benefit managers — the PBMs — are a middleman. They negotiate rebates and discounts on drugs with manufacturers and wholesalers, on behalf of health plans. Pharmacies contract with PBMs to gain access to networks and submit claims for reimbursement at negotiated rates.
Community pharmacies have been struggling to keep up, with low prescription reimbursements by PBMs and insurance plans cited as the cause by some. PBMs are often owned or are affiliated with mail-order or retail chains —for example, CVS Health owns the PBM CVS Caremark. PBMs have been accused of steering customers toward their own pharmacies.
Since January 2022, at least 100 community pharmacies have closed in North Carolina. Nationally, 300 independent pharmacies closed in 2023 alone, according to the National Community Pharmacy Association (NCPA), which represents independent community pharmacies.
Independent pharmacies often rely on Pharmacy Services Administrative Organizations, or PSAOs, to negotiate contracts with PBMs.
The Senate bill regulates various players in this industry. Among other things, it would prohibit PBMs from reimbursing pharmacies in pharmacy deserts at rates below what they pay to acquire medications. PSAOs would also face new rules, needing to be licensed and regulated by the state's Department of Insurance.
The bill would require the State Health Plan, which covers state employees, to consider adopting most of the bill's provisions in its next PBM contract. The plan's current PBM is CVS Caremark.
The House bill focuses largely on PBMs, banning spread pricing — a practice where PBMs charge insurers more for a drug than they reimburse pharmacies and keep the difference.
It also limits the fees PBMs can impose on pharmacies and prohibits favoritism toward PBM-affiliated pharmacies.
