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California is cracking down on pharmacy benefit managers (BioPharmaDive).

What’s going on: Last Friday, California Gov. Gavin Newsom signed Senate Bill 41 into law, which goes into effect on Jan. 1, 2026. This law requires PBMs to pass through drug rebates to payers and patients and delinks PBM compensation from drug prices, among other provisions.

The background: The NAM has long called for PBM reform. PBMs are largely unregulated middlemen that drive up health care costs for manufacturers and manufacturing workers. Just three PBMs control 80% of the market.

• The Federal Trade Commission conducted a two-year investigation that found that the biggest PBMs inflated medication list prices, steered patients away from more affordable drugs for their own financial gain and paid independent pharmacies less than their vertically integrated pharmacies.

The federal landscape: There is broad, bipartisan support in Congress for PBM reform, although it has yet to become law. The NAM has continually called on Congress to pass PBM reform to lower health care costs for manufacturers and manufacturing workers.

• Federal reforms are critical to avoid a 50-state patchwork that would create confusion and increase burdens for manufacturers.

The last word: “Manufacturers appreciate California’s bipartisan move to end PBM abuses,” said NAM Director of Health Care Policy Jess Wysocky.

• “California has shown it is possible to get PBM reform across the finish line in a bipartisan way. Manufacturers once again call on Congress to pass comprehensive PBM reform to lower health care costs for manufacturers and their workers. With the cost of health care continually rising, these reforms can’t wait.”