SB227 Alabama 2021 Session

Summary

Primary Sponsor

Tom ButlerSenator

Republican

Co-Sponsors

Gerald H. AllenWill BarfootWilliam “Bill” M. BeasleyGarlan GudgerJimmy HolleySteve LivingstonDel MarshArthur OrrDan RobertsClay ScofieldRodger SmithermanLarry Stutts

Session

Regular Session 2021

Title

Pharmacy benefits managers, practices relating to patient steering, price discrimination, fiduciary duty to client, price disclosure, etc. regulated, Dept of Insurance, duties and authorities revised, Act 2019-457, 2019 Reg. Sess., sections amended and renumbered; Secs. 27-45A-6 to 27-45A-11, inclusive, 27-45A-13 added; Secs. 27-45A-3, 27-45A-4, 27-45A-5 am'd.

Summary

SB227 would regulate pharmacy benefits managers in Alabama by licensing them, limiting steering and price practices, and increasing price transparency and reporting, while extending these rules to health insurers.

What This Bill Does

It requires pharmacy benefits managers to be licensed by the Commissioner of Insurance, with a formal licensure process, fees, and periodic renewals. It prohibits PBMs from restricting a patient’s choice of pharmacies or forcing use of mail-order or PBM affiliates, and prohibits steering through monetary incentives, with some exceptions. It mandates annual reporting of rebates and pricing practices to clients, requires price-share disclosures to patients, and empowers the commissioner to enforce rules and impose penalties. It also expands PBM oversight to certain health insurers and sets effective dates for licensing and contract applicability.

Who It Affects

• Pharmacy benefits managers (PBMs) themselves, who must obtain and renew licenses, follow licensing rules, pay fees, and comply with reporting and enforcement provisions.
• Covered individuals and health benefit plans/insurers (including patients and health plans), who gain protections for choosing pharmacies, access to price and rebate information, and requirements for price transparency and non-discriminatory reimbursements.

Key Provisions

• Defines PBM, PBM affiliate, and related terms; adds new sections 27-45A-8 through 27-45A-12 to regulate PBMs and to subject certain insurers to PBM laws.
• PBMs may not require or incentivize exclusive use of mail-order pharmacies or PBM affiliates; must allow in-network pharmacy choice and prohibit steering through penalties or discounts (with limited exceptions).
• PBMs cannot use covered individuals' data to solicit or direct them to mail-order or PBM affiliates; may notify about cheaper options without forcing switching; notifications may be regulated by rules.
• PBMs must provide annual reports to clients detailing total rebates, rebates not passed through, and spread pricing; reports are confidential or contractually governed; clients must be notified that reports are available.
• License requirements: PBMs must be licensed by the commissioner; application and renewal fees up to $500; license terms, public records, and renewal schedules; changes must be reported within 30 days with penalties for late reporting.
• The Commissioner of Insurance may adopt rules to implement the PBM provisions; enforce compliance; conduct examinations; and impose civil penalties; PBMs have hearing and appeal rights similar to insurers.
• No misrepresentation: PBMs may not knowingly misrepresent to a covered individual, pharmacist, or pharmacy; processing rules require PBMs to ensure cost-sharing does not unnecessarily burden patients.
• Network and reimbursement protections: PBMs cannot reimburse in-network providers at rates lower than similar affiliates; cannot deny contract participation if terms are met; cannot impose overly burdensome credentialing beyond state board rules; must allow sharing of cost-share information with patients.
• Delivery and audit rules: PBMs may not unreasonably prohibit delivery of pharmacy services and must meet safety/quality standards; certain delivery fees may be restricted; recoupments related to audits must follow the Pharmacy Audit Integrity Act and cannot be penalized outside those rules.
• Price and market structure protections: prohibits basing drug reimbursements on 256b-related constraints for non-Medicaid drugs; restricts anti-competitive practices tied to 256b programs; prohibits extra charges or restrictions on entities involved in 256b programs.
• Reporting to health plans and insurers: clarifies that health plans may require annual rebate/spread pricing information; cross-references apply to insurers to ensure PBM-laden practices are regulated.
• Effective dates: Act becomes effective July 1, 2021; applies to PBM contracts entered after October 1, 2021; pre-2022 PBMs must reapply by January 1, 2022 with old license expiring upon new license issuance.

AI-generated summary using openai/gpt-5-nano on Feb 23, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Pharmacies and Pharmacists