AN ACT to create and enact four new sections to chapter 26.1-27.1 of the North Dakota Century Code, relating to pharmacy benefits managers and a pharmacy benefit manager enforcement fund; to amend and reenact subsection 1 of section 26.1-01-07, sections 26.1-27.1-01, 26.1-27.1-02, 26.1-27.1-04, 26.1-27.1-06 and 26.1-27.1-07 of the North Dakota Century Code, relating to pharmacy benefits managers; to repeal section 26.1-27-01.1 and chapter 26.1-36.10 of the North Dakota Century Code, relating to pharmacy benefits managers and prescription drug costs; to provide a penalty; to provide an appropriation; to provide for a transfer; to provide an effective date; to provide an expiration date; and to declare an emergency.
HB 1584 revises North Dakota’s pharmacy benefit manager (PBM) laws and creates a new enforcement structure for the insurance commissioner. The bill requires PBMs operating in the state to be licensed, sets application and renewal requirements, requires $1 million in financial responsibility, and makes unlicensed operation a class C felony. It also expands the statutory definitions of PBM activity and payments received by PBMs, including rebates, administrative fees, pharmacy network fees, and other compensation tied to drug switching, formulary management, mail-order pharmacy, and data sales.
The bill adds new conduct rules and enforcement tools. PBMs may not force pharmacies into one contract to participate in another, may not exclude qualified pharmacies that accept contract terms, and must offer opt-in contracts with notice periods; pharmacies may opt out with 90 days’ notice. The commissioner is authorized to examine PBM contracts and related records during insurer examinations, to require annual disclosure of how PBM-related payments are used, and to treat disclosed information as trade secret material. The bill also creates administrative penalties, restitution authority, service-of-process rules, and a dedicated pharmacy benefit manager enforcement fund supported by transfers and certain wholesaler license fee revenue. It appropriates $1.2 million for enforcement and an actuarial study, authorizes three FTEs, repeals prior PBM and prescription drug cost provisions, and delays one licensing section until January 1, 2026.
The overall sentiment appears strongly supportive. The bill passed the House twice with unanimous or near-unanimous support and passed the Senate 42-5, indicating broad bipartisan agreement on the need for tighter PBM oversight and stronger enforcement. The emergency clause and appropriation suggest lawmakers viewed the issue as urgent and operationally important.
The main points of contention likely centered on the scope of regulation and enforcement, especially the felony penalty for operating without a license, the commissioner’s access to PBM and covered-entity records, and the new fee and funding structure. The bill also shifts responsibility onto insurers, pharmacies, and PBMs to comply with new contract, disclosure, and licensing requirements, which may have raised concerns about administrative burden, confidentiality, and the effect of regulation on drug pricing and insurance premiums. The required actuarial analysis indicates lawmakers wanted to measure those potential impacts rather than assume them.
HB 1584 substantially rewrites North Dakota’s PBM regulatory framework in chapter 26.1-27.1, replacing prior PBM and prescription drug cost provisions with a licensing, enforcement, and disclosure regime. It expands the insurance commissioner’s authority, creates new penalties and restitution remedies, establishes a special enforcement fund, and authorizes a transfer of the drug pricing fund balance into that fund. It also affects pharmacies, covered entities, insurers, and PBMs by imposing contract, reporting, and participation rules, and it may indirectly affect prescription drug pricing and health insurance premiums through the new oversight structure.
The bill’s sentiment was broadly favorable and largely noncontroversial in recorded votes. It passed the House 92-0 on one second reading vote and 90-0 on another, and it passed the Senate 42-5, showing strong bipartisan support for PBM regulation. The emergency designation and dedicated funding also suggest lawmakers considered the measure important and timely.
The likely areas of disagreement were the breadth of state intervention in PBM business practices, the severity of the class C felony for unlicensed operation, and the commissioner’s expanded examination and enforcement powers. Some opposition in the Senate suggests at least a small group of lawmakers may have been concerned about regulatory overreach, compliance costs, confidentiality of trade secrets, or unintended effects on pharmacy access and drug prices. The bill’s new fee transfers and appropriation could also have drawn scrutiny from those wary of using industry-generated revenue to fund enforcement.