Health insurance; cost-sharing, pharmacy benefits managers, compensation and duties, civil penalty.
SB1078 would revise Virginia law governing health insurance and pharmacy benefits managers (PBMs) to require more of the savings from prescription drug rebates to be reflected at the pharmacy counter. The bill directs PBMs, when administering pharmacy benefits for a carrier or health plan, to offer point-of-sale rebates and to calculate an enrollee’s cost-sharing using a price reduced by at least 80 percent of rebates received or expected to be received. It also adds confidentiality protections for rebate information, treating product-, manufacturer-, and pharmacy-specific rebate data as trade secrets.
The bill also expands and reorganizes PBM regulation by amending licensing, reporting, and prohibited-conduct provisions and by adding a new PBM duty section. It would prohibit spread pricing, limit PBM income to defined pharmacy benefits management fees, require annual certification of compliance, and impose civil penalties for violations. In addition, it would create a statutory PBM duty of care, transparency, and good faith owed to enrollees, health benefit plans, and providers, and it would authorize private lawsuits by aggrieved persons for breaches of that duty.
If enacted, SB1078 would substantially change the regulatory framework for PBMs and prescription drug cost-sharing in Virginia. It would amend existing insurance code provisions on fairness in cost-sharing, PBM licensing, and prohibited conduct, while adding new sections that require point-of-sale rebate pass-through, bar spread pricing, and establish a private cause of action for breach of PBM duties. The bill would affect carriers, health plans, PBMs, pharmacies, covered entities and contract pharmacies, and enrollees in state-regulated health plans, while excluding certain coverage types such as Medicare, Medicaid, CHIP, TRICARE, federal employee plans, and self-insured ERISA plans from some definitions.
The available voting history suggests the bill faced significant resistance in committee. SB1078 was defeated in the Senate Commerce and Labor Committee on a 5-10 vote and did not advance. No committee transcript is available in the provided materials, so the record reflects opposition at the committee stage rather than a broader floor debate. The bill’s structure indicates a reform-oriented approach to lowering out-of-pocket drug costs and increasing PBM accountability, but the committee result shows that those changes were not supported by a majority of members present.
The main points of contention are likely the bill’s mandatory rebate pass-through, the prohibition on spread pricing, and the creation of a private right of action against PBMs. These provisions would directly affect PBM business models and compensation structures, which are often contested by insurers, PBMs, and pharmacy stakeholders. Additional friction points include the bill’s limits on network and reimbursement practices involving 340B covered entities and contract pharmacies, and its requirement that rebate information remain confidential while still imposing new transparency and duty obligations. Supporters would likely emphasize lower consumer cost-sharing and stronger accountability, while opponents would likely focus on administrative burden, litigation exposure, and restrictions on PBM contracting and pricing flexibility.