While federal and state legislators contemplate the next wave of PBM and drug pricing reform, legislatures in Virginia and Ohio have already sent significant legislation addressing prescription drug pricing and pharmacy benefit manager oversight to their respective governors in early 2026.
Virginia’s Legislature Poised to Adopt Maximum Fair Prices for Virginia-Regulated Health Plans
On March 30, 2026, the Virginia legislature passed the Affordable Medicine Act (H.B. 483), which is currently awaiting Governor Spanberger’s signature. The bill would establish a Prescription Drug Affordability Advisory Panel (Panel) and adopt the “maximum fair prices” established under the Inflation Reduction Act for drugs purchased by Virginia-regulated health plans and state employee plans. ERISA-regulated plans can opt in.
Previous attempts to establish a prescription drug affordability board with the ability to set upper payment limits were vetoed by former Governor Glenn Youngkin (H.B. 1724 in 2025 and H.B. 570 / S.B. 274 in 2024).
The Panel is also charged with developing policy recommendations and strategies to improve prescription drug affordability within the Commonwealth. It will report annually to the governor and legislature on prescription drug pricing trends and make policy recommendations. Under the bill, PBMs are required to report financial information to the Panel, including administrative fees, formulary management fees, rebate retention, and network access fees. State-regulated health plans must report how the cost savings obtained from maximum fair prices benefit enrollees, particularly with respect to cost sharing.
The Virginia legislature has also passed other bills affecting PBMs and health plans, most notably:
- S.B. 669, which was signed by Governor Spanberger on March 31 and is effective July 1, 2026, expands Virginia’s regulation of carriers and PBMs by adding new prohibited practices — including charging electronic claim processing fees, reversing claims without prior written notice or just cause, reducing payments to effective reimbursement rates not agreed to in a provider agreement, and retroactively denying or reducing claims except in limited circumstances — and by codifying specific acts that constitute prohibited retaliation against pharmacies. Building on the existing spread pricing ban, S.B. 669 mandates pass-through pricing, requires PBMs to offer fee-only compensation arrangements upon plan sponsor request, and requires PBMs to direct 100% of manufacturer rebates to the carrier or plan (to offset cost sharing and reduce premiums) or to the covered individual at the point of sale.
- H.B. 1214, which is awaiting Governor Spanberger’s signature, reduces the existing aggregate cost-sharing cap for prescription insulin from $50 to $35 per 30-day supply, regardless of the amount or type of insulin prescribed. The law also sets an aggregate cost-sharing cap of $35 for a 30-day supply of diabetes equipment and supplies — including blood glucose meters and strips, continuous glucose monitors and supplies, and insulin pump supplies. The new caps are applicable to policies delivered, issued, reissued, amended, or extended on or after January 1, 2027.
Ohio Moves PBMs Out of TPA Framework with New Licensure and Oversight Law
On March 31, 2026, Ohio enacted H.B. 229 to create a separate licensure framework for PBMs under a new Chapter 3957 of the Ohio Revised Code. PBMs were previously regulated as third-party administrators (TPAs) under Chapter 3959.
Many of the provisions in the new law resemble requirements that previously applied to PBMs licensed as TPAs, but the new law contains enhanced transparency and disclosure requirements for pharmacy benefit services agreements that are entered into, amended, or renewed on or after July 1, 2027. The new law also includes more robust audit and enforcement powers for the superintendent of insurance.
The following summary highlights the most significant substantive differences for PBMs under the new regime.
Licensing
As of July 1, 2027, PBMs that offer or provide services to plans or plan sponsors domiciled or headquartered in Ohio will need a PBM license under Chapter 3957. The superintendent of Ohio’s Department of Insurance (the Superintendent) will adopt rules governing the licensing process.
Transparency and Disclosure
H.B. 229 introduces three new transparency and disclosure obligations that a PBM must satisfy with respect to each plan sponsor. These requirements apply to agreements entered into, amended, or renewed on or after July 1, 2027.
- A PBM must account to the plan sponsor, on at least an annual basis, for any of the following items received by the PBM: pricing discounts, rebates of any kind, inflationary payments, credits, claw backs, fees, grants, charge backs, drug product reimbursements, or other benefits received by the PBM. In addition to the accounting obligation, the PBM must give the plan sponsor access to all financial and utilization information used by the PBM in relation to the pharmacy benefit management services provided to that plan sponsor.
- A PBM must disclose in writing to the plan sponsor the terms and conditions of any contract or arrangement between the PBM and any other party relating to the pharmacy benefit management services provided to the plan sponsor. The law expressly includes, but is not limited to, pharmacy benefit management services provided to group purchasing organizations.
- A PBM must disclose in writing to the plan sponsor any activity, policy, practice, contract, or arrangement of the PBM that directly or indirectly presents any conflict of interest concerning the PBM’s relationship with or obligation to the plan sponsor.
Audit Rights of the Superintendent
H.B. 229 extends recordkeeping requirements and grants the Superintendent targeted audit authority to examine rebates and spread pricing.
The existing TPA framework and the new PBM law each require certain recordkeeping related to premiums or contributions, claims, and disbursements, as well as annual fiscal‑year reports to insurers or plan sponsors. The new PBM law, however, extends record‑retention obligations to 10 years after a PBM ceases providing services to the insurer or plan sponsor, compared to the TPA law’s requirement to retain records only for the period of service.
Additionally, the current TPA law does not grant the Superintendent any express statutory authority to examine or audit a TPA’s books and records. While Section 3901-8-05 of the Ohio Administrative Code provides the Superintendent with access to “the general business books, records, and other information” of the TPA and includes a complaint-driven audit mechanism, H.B. 229 creates a targeted rebate and payment examination authority that allows the Superintendent to examine PBM books and records specifically to determine:
- the aggregate rebates received by the PBM;
- the aggregate rebates distributed to plan sponsors;
- the aggregate rebates passed through to consumers at the point of sale (reducing deductibles, copayments, coinsurance, or other cost-sharing);
- the individual and aggregate amounts paid by plan sponsors to the PBM for pharmacist services, itemized by pharmacy, product, and goods and services; and
- the individual and aggregate amounts the PBM paid for pharmacist services, itemized by pharmacy, product, and goods and services.
Enforcement Options
H.B. 229 provides the Superintendent with more robust enforcement options, including:
- Broader Civil Penalties Options: The Superintendent may assess civil penalties of up to $15,000 per violation for any violation of Chapter 3957 or rules adopted thereunder. Under the existing TPA framework, monetary fines are limited to two narrow categories: fraud or illegal or dishonest activity, and violations of a specific section of law governing MAC pricing lists.
- New Cease-and-Desist Order Authority: The superintendent may issue cease-and-desist orders when a PBM’s prohibited conduct is causing or is about to cause substantial and material harm, or when the superintendent determines such action to be in the best interest of the public, insurers, and plan sponsors. Compliance is required immediately upon receipt, with a hearing scheduled within 15 days.
States remain active in proposing and advancing legislation affecting PBMs and health plans. We will continue to monitor and report on notable developments.
