Provides limitations on overlapping control between insurance companies and pharmacy benefits managers and pharmacies

◆ The sponsor's argument

Why Michelle Hinchey says this is needed

The purpose of Pharmacy Benefit Managers (PBMs) is to negotiate a better price with drug manufactures and pass these savings onto consumers. This does not always happen as expected. And most of the time, the proc- ess lacks transparency. Most PBMs operate on a spread basis, meaning that they do not pass along the entire savings to consumers. Instead, they take a cut off the top and charge an additional amount to the phar- macy above what they have negotiated for a particular drug. Others work on a "pass through" basis, in which they pass through the full savings to the consumer less a flat fee, which is paid monthly. The "Big 3" PBMs are CVS Caremark (owned by CVS Health), OptumRx (owned by UnitedHealth Group), and Express Scripts (owned by The Cigna Group), which collectively manage approximately 80% of the U.S. prescription drug market. CVS Health, a multinational healthcare company and the parent company of retail pharmacy chain CVS, owns CVS Caremark. It also owns the health insurer Aetna. This means that CVS Health has full vertical integration because it owns its entire supply chain. UnitedHealth Group owns the PBM Optum Rx and UnitedHealthcare, the largest insurer in the United States. It also recently acquired health care providers Crystal Run and Care- Mount Medical in the Hudson Valley and is known as Optum. The Cigna Group owns major insurer Cigna Healthcare, in addition to the PBM Express Scripts. While Cigna does not own physical pharmacies, it owns specialty and home delivery pharmacies, including Accredo and Express Scripts Pharmacy, which are part of its Evernorth Health Services division. Ten per cent of the PBM market is owned by Prime Therapeutics, which itself is owned by the insurer Blue Cross Blue Shield. The problem with this vertical integration, whether it is full or partial, is that there are inherent conflicts up and down the supply chain. A July, 2026 article in Forbes spelled out this problem: "After two years of research, the Federal Trade Commission's recent interim report on Pharmacy Benefit Managers has authoritatively docu- mented the multiple ways in which the three largest PBMs have contrib- uted to the rising cost of drugs. This investigation has shone a spot- light on a list of questionable practices that have long been the subject of complaints from consumers, independent pharmacies, pharmaceu- tical manufacturers, employers and other stakeholders... Their interim report alleges that this oligopoly of PBMs, functioning in the shadows as intermediaries, has used its extraordinary market power to extract revenue from other stakeholders at the expense of drug pric- es, patient care and market competition." The article goes on to identify "a complex web of financial maneuvers," including rebates from drug manufacturers that actually encourage drug companies to inflate prices, knowing PBMs will negotiate them down. More crucially, PBMS use these to influence formulary (drug list) design. This determines which prescription drugs are covered, and it has a major impact on the accessibility and cost of medications for consumers. And vertical integration means that PBMs can set reimbursement rates to favor their parent companies. This is where, as the article puts it, "PBMs have perfected the art of the squeeze," driving down reimbursement rates for independent pharmacies rates so much that they are often paid less for a prescription than it cost them to acquire it. This systematic underpayment is already forcing the closure of independent pharmacies. This bill would prohibit such monopolistic behavior between insurance companies, pharmacies, and pharmacy benefit managers. It would untangle the web of conflicts and prevent a person or entity from directly or indirectly owning, operating, or otherwise controlling any part of an insurance company and/or pharmacy benefit manager and/or pharmacy or any combination thereof.

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.