State Series: Drug Pricing

KPMG Regulatory Insights

Intensity: States have intensified legislative efforts to boost transparency in the pharmaceutical industry, including updates aligning with the federal 340B Drug Pricing Program as well as reforms to Pharmacy Benefit Manager practices (e.g., rebate pass-throughs, compensation, and “fiduciary duty”).
Collaboration: Both federal and state government bodies are individually and together focused on potentially anti-competitive behaviors within pharmaceutical markets, including drug prices and reimbursement practices.
Planning: Companies should engage in strategic and quantitative planning to effectively navigate the current legislative/regulatory environment given the efforts to reduce drug prices and increase transparency.

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September 2025

As prescription drug prices continue to rise, attentions are focusing on transparency and affordability at both the federal and state levels.

At the federal level, the current administration is focused on policies intended to lower U.S. prescription drug prices. Executive Order 14273, “Lowering Drug Prices by Once Again Putting Americans First,” focuses on three main policy areas: price reduction, transparency, and competition. Executive Order 14297, “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients,” in part, directs the DOJ and the FTC to pursue enforcement against potentially anti-competitive practices in pharmaceuticals markets. A recent memorandum directs HHS and FDA to ensure transparency and accuracy in direct-to-consumer prescription drug advertising.

At the state level, legislative activity is meant to enhance oversight of market participants, including Pharmacy Benefit Managers (PBMs), and price transparency through disclosure/reporting.

State attorneys general (AGs) are actively investigating billing, rebate, and discount practices as well as collaborating on multistate enforcement actions targeting anti-competitive conduct and unfair practices. Recently, a majority of state AGs jointly asked Congress to pass legislation to mitigate PBM conflicts of interest and prohibit PBMs from owning or operating pharmacies citing increased horizontal consolidation, vertical integration, and impacts to access and price.

Notable state activity in 2025 includes:

Oversight & Drug Price Transparency (e.g., PBM oversight, disclosures, reporting)
Drug Costs & Affordability (e.g., fair pricing, direct price control, PDABs)

Recent state legislation (introduced and/or enacted) aims to enhance price transparency within the pharmaceutical industry, including pricing models under the federal 340B Drug Pricing Program for manufacturers and other covered entities. Further, concerns over PBMs’ perceived ability to influence drug pricing or control access has spurred numerous states into legislative action. Key provisions of bills introduced in 2025:

Key Features
Key Feature	Description/Examples
PBM Oversight	Expand state AG oversight of PBMs including investigatory and penalty authorities (e.g., NY, TX) Prohibit practices such as deceptive practices to raise drug prices, patient “steering”, retaliation against covered entities, and restricting or denying covered entities access to 340B drugs (e.g., IL, CO, NC, CT) “Delink” PBM compensation from rebates/discounts on drug prices by implementing a flat, fixed fee for their services (e.g., CO) Require PBMs to pass-through manufacturer rebates to patients and prohibit spread pricing (e.g., UT, LA, NC, CT) Impose a “fiduciary duty” or “duty of care” on PBMs to act as agents of the health plan or insurer (e.g., MA, OK, NC, OR, CA,WI ) Prohibit PBM’s from owning pharmacies (e.g., AK)
Disclosures	Introduce/amend legislation to require covered entities (e.g., manufacturers, PBMs, wholesale distributors) to disclose increases in wholesale acquisition costs (WACs) over certain limits (e.g., 25 percent) as well as justification for the increase (e.g., NC, MA, RI) Require advance notification of new-drug launch prices to entities such as the state insurance commissioner or department of health (e.g., MA, MS, NM) Direct price disclosures to consumers, such as requiring pharmacies to disclose the retail price of prescription medication (e.g., NY) or insurers to provide covered individuals with a summary of the amounts spent on prescription drugs for that individual (e.g., VT) Require PBMs and health plans to provide “real- time” access to prescription drug cost, benefit, coverage, and alternatives data at the point of prescription (e.g., IL)
Reporting	Require 340B covered entities to submit annual reports to entities such as state boards or department of health that include aggregated acquisition costs for prescription drugs; aggregated payments received by individuals, insurers or payors; annual estimated savings; number of claims; and how savings were used to benefit the community (e.g., CO, ID, VT) Establish an annual reporting requirement to the State legislature on market trends in the state for prescription drugs, including top drugs prescribed, costliest drugs, and highest year over year increases (e.g., NC, NM, RI)

In 2025, various states have introduced/enacted legislation aimed at ensuring that prescription drugs remain affordable, through fair pricing and prohibitions on discriminatory practices. A number of states have established Prescription Drug Affordability Boards (PDABs) as independent bodies to review drug prices with the intent to make medications more affordable for consumers and public health systems. In 2025, several states expanded or refined the authority of their PDABs. Key features of state activity include:

Key Features
Key Feature	Description/Examples
Fair Pricing	Establish external benchmarks for reference rates or prices for reimbursement (e.g., NY, CT, ME) Prohibit purchasing or seeking reimbursement for a “referenced drug” that is higher than a benchmark price (e.g., NV, RI, AZ) Require PBMs and managed care organizations (MCOs) to reimburse community pharmacies at or above the National Average Drug Acquisition Cost (NADAC) (e.g., AL, IA, MN, MT) Prohibit the sale of prescription drugs to senior citizens (defined as age 60 or older) at a price higher than the “lowest national price” (e.g., WV) Prohibit drug manufacturers from restricting 340B-priced drugs to contract pharmacies (e.g., NM, ND, SD and UT)
Direct Price Control	Establish maximum fair prices (MFP) as defined by the Inflation Reduction Act for state drug purchasing agencies (e.g., NV)
Prescription Drug Affordability Boards (PDABs)	Expand PDAB authority to set upper payment limits (UPLs) to include all payers inclusive of private insurers and employer-sponsored health plans in addition to public payers such as Medicaid or state employee health plans (e.g., MD) Refine the affordability review process to update certain requirements including the number of affordability reviews performed each year and reporting requirements (such as frequency and/or recipient) (e.g., OR)

Footnotes:
¹National Association of Attorneys General, Letter to Congress RE: Pharmacy Benefit Managers, April 14, 2025
²Reuters.com, Drugmakers to raise US prices on over 250 medicines starting Jan. 1, Decembers 31, 2024
³Multistate.us, PDABs and UPLs: What They Are and Why They Matter for Drug Pricing Policy, May 15, 2025
⁴WhiteHouse.gov, Fact Sheet: President Donald J. Trump Amends Duties to Address the Flow of Illicit Drugs Across our Northern Border, July 31, 2025
⁵ NCSL.org, 5 Prescription Drug Policy Trends to Watch in 2025, January 27, 2025