Fall 2026 Edition
Welcome to The Legislative Dose, SlateRx’s regular briefing on the ever-evolving world of pharmacy benefits legislation. This brief report will provide insights and updates on policies, regulations, reforms, and trends shaping the pharmacy benefits space that impact plan sponsors and patients alike. We hope you consider this a concise, reliable resource for staying informed and prepared in a shifting legislative landscape.
The pace of pharmacy benefit regulation continues to accelerate. Over the past several months, states have introduced or implemented dozens of legislative bills, regulatory bulletins, emergency rules and executive actions aimed at reshaping how PBMs operate, get paid, build pharmacy networks and manage prescription drug benefits.
Here’s a look at the regulatory trends and several important cases we’re watching:
Legislative Trends
1. Tighter Limits on PBM Revenue Models
States continue to target spread pricing, rebate retention and other traditional PBM revenue streams, while pushing toward 100% rebate pass-through and more transparent, fee-based compensation models.
2. Greater Protection for Independent and Local Pharmacies
New laws are establishing pharmacy reimbursement floors and anti-steering protections, and some states are going even further by targeting vertical integration between PBMs, insurers and pharmacies.
3. Streamlining Utilization Management
States are also placing new limits on prior authorization and automated decision-making, including requirements for human clinical review, fewer repeat authorizations for chronic conditions and stronger continuity-of-care protections.
Legislative Shifts to Watch
Illinois Prescription Drug Affordability Act Challenged
Status: Legal challenge filed June 17, 2026
Summary: The Prescription Drug Affordability Act (PDAA) bans spread pricing, forces PBMs to disclose highly sensitive commercial information (granular rebate sizes, transaction costs, and raw contracts), and bans PBMs from steering patients to their own in-house pharmacies through plan design. The Pharmaceutical Care Management Association (PCMA) filed a federal lawsuit challenging portions of Illinois’ PDAA, which took full effect January 1, 2026. PCMA argues that certain reporting, anti-steering and pharmacy network provisions are preempted by ERISA because they interfere with the ability of self-funded employers to design and administer their health plans.
What it could mean for your plan: This case could help define how far states can go in regulating PBM practices that affect self-funded employer plans. If PCMA succeeds on its ERISA claims, certain Illinois requirements may not apply to self-funded plans. This case is one to watch as other states pursue similar PBM reforms.
Tennessee FAIR Rx Act Challenged
Status: Multiple legal challenges pending
Summary: Tennessee’s Freedom, Access and Integrity in Registered Pharmacy (FAIR Rx) Act bans any health insurer or PBM from owning more than a 5% stake in any pharmacy operating in the state. The restriction is scheduled to take effect in 2028. In July 2026, four federal challenges to the FAIR Rx Act were consolidated into a single proceeding, CVS Pharmacy, Inc. v. Tennessee Board of Pharmacy, which now serves as the lead case. The case argues that this is an unconstitutional Commerce Clause violation that discriminates against national companies to protect local, independent pharmacies. They also contend that the law could force PBM-affiliated retail, mail order and specialty pharmacy operations to close, divest or restructure.
What it could mean for your plan: If the law survives these challenges, it could significantly change how vertically integrated PBMs operate pharmacy networks in Tennessee and potentially affect mail order and specialty pharmacy arrangements for plans with members in the state. The litigation may also influence similar efforts in other states considering restrictions on PBM ownership of pharmacies.
Flowers v. Caremark PCS Health
Status: Decided June 29, 2026
Summary: The Eighth Circuit Court of Appeals ruled in Flowers v. Caremark that a key element of Arkansas’ PBM regulation law is preempted by ERISA. The law’s “Geographic Coverage Requirements” forced PBMs to ensure that a strict percentage of plan members lived within a set distance of a network pharmacy, including as little as two miles in urban areas. The court ruled in favor of Caremark, finding that these rigid geographic requirements interfere with ERISA’s core objective of uniform benefit administration by forcing PBMs to continually tailor pharmacy networks to comply with state-specific rules.
What it could mean for your plan: The ruling strengthens the argument that ERISA preemption limits states’ ability to impose pharmacy network requirements on ERISA plans. As similar cases move through other federal circuits, consistent rulings, or a potential circuit split, could further clarify the bounds of ERISA preemption and state PBM regulation.
Our Take
The direction of PBM regulation is increasingly clear: more transparency, tighter controls on compensation, greater scrutiny of vertical integration and pharmacy networks, and new restrictions on utilization management. What remains less clear is how much of this state-level regulation can ultimately be applied to self-funded ERISA plans.
SlateRx is proactively monitoring these developments and will continue to distill their implications into timely, actionable insights so our clients can make informed decisions. As legislative and regulatory changes continue across the market, SlateRx’s model is well positioned to navigate this evolving landscape on behalf of our clients, helping ensure they remain compliant and protected from unnecessary risk.
If you would like to discuss these changes or evaluate whether your current strategy is positioned for what lies ahead, please reach out to us. We’re happy to help.
