North Carolina Legislature Advances Transparency and Regulation for Pharmacy Benefit Managers
Pharmacy benefit managers (PBMs) have become a pivotal and controversial element in the U.S. healthcare supply chain, particularly impacting independent pharmacies in North Carolina. Originally established in the 1960s to leverage bulk purchasing for lowering drug costs, PBMs now wield significant control over pharmacy benefits. This shift has raised concerns about opaque practices and the contribution of PBMs to rising drug prices by taking larger fees in deals between insurers and drug manufacturers.
In North Carolina, the state legislature has introduced two separate bills targeting PBM regulation: Senate Bill 479 and House Bill 163, each proposing different approaches. The House bill emphasizes eliminating spread pricing and enforcing fair reimbursement through a specific formula, while the Senate bill focuses on transparency via enhanced reporting requirements for PBMs. Both aim to increase transparency and reduce the financial strain on independent pharmacies facing reimbursement rates that often do not cover drug acquisition costs.
PBMs consolidate substantial power, dominated by three major companies—CVS Caremark, Express Scripts, and Optum Rx—that process the majority of prescription claims nationwide. These PBMs are often embedded within larger healthcare conglomerates that include insurers and pharmacy operations, granting them significant negotiating leverage. This market concentration can channel patients toward affiliated pharmacies, sometimes prioritizing business relationships over cost efficiency.
Independent pharmacists report financial losses and struggle to stay viable due to low reimbursement rates, particularly for branded drugs. They rely increasingly on generics and additional services like vaccinations to sustain operations. Critics argue these challenges have contributed to the closure of hundreds of pharmacies in North Carolina, especially in rural areas where these outlets represent crucial healthcare access points. Community pharmacists play an essential role in patient care beyond dispensing medications by fostering patient relationships that support better health outcomes.
Industry representatives counter criticisms by stating PBMs pass the majority of rebates to clients and save patients significant amounts annually. Reports from some economic consultancies claim independent pharmacies receive higher reimbursements compared to chains; however, these findings contrast with frontline experiences reported by pharmacists and state associations.
The proposed legislation mandates PBMs to increase disclosures on drug purchasing costs, concessions received, and profits from spread pricing. Enhanced state oversight could also require the North Carolina Department of Insurance to expand enforcement capacity. Nonetheless, self-funded insurance plans remain exempt from state regulation due to federal jurisdiction, a significant consideration given their coverage of nearly half of the state’s population.
Nationally, all states have enacted some form of PBM regulation by 2024, generally including provisions for transparency, patient cost protections, and disclosure of lower-cost alternatives. The evolving regulatory landscape reflects growing attention to balancing PBM functions with the interests of pharmacies, insurers, and patients.
Stakeholders acknowledge that PBMs serve a legitimate role in managing prescription benefits; however, concerns about market exploitation and opaque practices persist. Some advocates emphasize the need for continued reforms to promote fair reimbursement, ensure supply chain transparency, and protect independent pharmacies critical to community health infrastructure. These reforms intersect with broader healthcare policy debates over cost control, access, and the integration of pharmacy services within insurer-controlled health systems.