HB 690: Pharmacy benefits managers; duty of care to insureds, health plans, and providers; provide

Pharmacy benefits managers (PBMs) are companies that administer prescription drug benefits for insurers and employers, negotiating rebates and payments with pharmacies and drug manufacturers. Georgia law already licenses and regulates PBMs, but this bill adds new legal duties they must follow toward the people and organizations they deal with. The bill rewrites the definitions section of Georgia's PBM law (O.C.G.A. § 33-64-1) to add terms like 'spread pricing,' 'related entity,' and 'pharmacy benefits manager duty,' and broadens what counts as a pharmacy benefits management service. It then adds a new section (O.C.G.A. § 33-64-14) requiring PBMs to act with care, good faith, and fair dealing toward insureds, health plans, and providers, with the Georgia Insurance Commissioner writing rules to define those duties, including disclosure of conflicts of interest and transparency about spread pricing. If duties conflict, the duty to insureds comes first, then providers, then health plans. Anyone harmed by a violation could sue a PBM in state court.

• Creates a new legal 'pharmacy benefits manager duty' requiring PBMs to act with care, skill, good faith, and fair dealing toward insureds, health plans, and providers.
• Directs the Insurance Commissioner to write regulations spelling out these duties, including requirements to disclose conflicts of interest and reveal 'spread pricing' (charging more than what was paid to the pharmacy).
• Sets a priority order when duties conflict: the duty to insureds ranks above all others, and the duty to providers ranks above the duty to health plans.
• Creates a private right of action, letting an insured, health plan, or provider sue a PBM in state court for violating these duties.
• Expands the law's definitions, adding terms such as 'controlled group of corporations,' 'related entity,' 'insurer,' and 'spread pricing,' and broadening the definition of 'pharmacy benefits manager' to cover affiliates, subsidiaries, and agents that facilitate PBM services.
• Adds language limiting the state's regulation of PBMs and insurers to what is permissible under applicable federal law.

Pharmacy benefits managers operating in Georgia, along with the insurers, employers, and health plans that hire them, are directly affected. Insureds (people covered by prescription drug benefits), pharmacies and other providers that dispense drugs, and the state Insurance Commissioner's office, which would write new implementing regulations, are also affected.

If enacted, insureds, providers, and health plans would gain a formal legal basis to demand transparency from PBMs about pricing and conflicts of interest, and to sue if that duty is violated. This could change how PBMs disclose spread pricing and rebate arrangements and how disputes over drug pricing are resolved in Georgia.

• Section 1 revises O.C.G.A. § 33-64-1 to add and update definitions, including 'spread pricing,' 'related entity,' 'insurer,' 'pharmacy benefits management fee,' and 'pharmacy benefits manager duty.'
• Section 1 broadens the definition of 'pharmacy benefits manager' to include agents, contractors, intermediaries, affiliates, and subsidiaries that facilitate or oversee PBM services.
• Section 2 revises O.C.G.A. § 33-64-13 to state that federal law governs where it conflicts with the chapter, and that the state may regulate PBMs and insurers only to the extent permissible under applicable law.
• Section 3 adds a new O.C.G.A. § 33-64-14 establishing the PBM duty owed to insureds, health plans, and providers, and directing the Commissioner to adopt implementing regulations covering formulary design, utilization management, grievances, and conflict-of-interest disclosure.
• Section 3 sets a priority order for conflicting duties: duty to insureds is primary over other parties, and duty to providers is primary over duty to health plans.
• Section 3 creates a private right of action allowing an aggrieved party to sue a pharmacy benefits manager in state court for violating the new duty.

1. 2025-03-04House Second Readers (House)
2. 2025-03-03House First Readers (House)
3. 2025-02-28House Hopper (House)

• Mark Newton (R, HD-127)Primary sponsor
• Michelle Au (D, HD-50)
• Sharon Cooper (R, HD-45)
• Ron Stephens (R, HD-164)
• Lee Hawkins (R, HD-27)

• pharmacy benefits managers
• prescription drug pricing
• health insurance regulation
• spread pricing
• consumer protection