By: Joe Boyle, President, ClearFile 

When Governor Gavin Newsom signed SB 41 on October 11th, California didn’t just pass another transparency law—it marked a major shift in how pharmacy benefit managers (PBMs) are regulated—and one that could reshape oversight nationwide. 

The bill bans spread pricing, mandates full rebate pass-through, and, for the first time, requires PBMs to obtain a state license to operate. The law’s scope is sweeping: it rewrites the economic model that has defined PBM operations for decades and puts California regulators in charge of ensuring compliance. 

But the real story isn’t just what happens in California. It’s what happens next. 

SB 41: California’s PBM Reform in Context 

SB 41 makes California one of the most aggressive states in PBM regulation, but it’s far from alone.
All 50 states now regulate PBMs in some form, and in 2024 alone, 33 new PBM bills passed across 20 states. In 2025, several others—Arizona, Colorado, Illinois, Iowa, New Jersey, New York, and Texas—introduced or expanded legislation restricting spread pricing, tightening rebate rules and imposing fair-access pharmacy requirements. 

Colorado has gone a step further, delinking PBM compensation from drug list prices entirely. Iowa’s new law is already under legal challenge on ERISA preemption grounds. Arkansas has cracked down on PBM-owned pharmacies. 

In short: SB 41 is not an outlier. It’s an accelerant. Other states are almost certain to follow, adopting similar provisions and, in some cases, using California’s enforcement model as a blueprint. 

Key SB 41 Provisions PBMs Must Now Track 

• Licensure required: PBMs must obtain a license from the Department of Managed Health Care by January 1, 2027 (or later if the process isn’t yet finalized). 
• Ban on spread pricing: Effective January 1, 2026 for new contracts—existing contracts become void by January 1, 2029. 
• Mandatory pass-through pricing: 100 percent of manufacturer rebates and concessions must flow to the health plan or insurer. 
• Reimbursement floor: Pharmacies must be reimbursed at least the National Average Drug Acquisition Cost (NADAC) plus a Medi-Cal-equivalent dispensing fee. 
• Fair access: PBMs cannot discriminate against non-affiliated pharmacies or steer members to preferred networks. 
• Transparency & enforcement: PBMs must submit detailed annual reports with violations triggering civil or criminal penalties, enforceable by the Attorney General. 

5 Things Every PBM Should Be Doing Right Now 

1. Conduct a 50-state gap analysis

   Identify where you’re licensed, where renewals are pending, and which states are introducing new PBM oversight. Map every effective date—especially California’s 2026 and 2027 deadlines. 

2. Redesign financial models

   Model profitability under pass-through and admin-fee structures. Ensure contracts are compliant before the 2026 and 2029 phase-outs. 

3. Centralize compliance operations

   Move away from spreadsheets and siloed trackers. Invest in tools that automate filings, monitor deadlines, and store regulatory documents securely. 

4. Anticipate enforcement and litigation

   Monitor early enforcement cases (e.g., Iowa, Arkansas). Have counsel ready for potential preemption challenges and audits. 

5. Make transparency your differentiator

   Don’t just comply—lead. Use compliance readiness as a trust signal for health plans and clients increasingly wary of PBM opacity. 

What Happens Next: A New Era of PBM Oversight 

Even PBMs already licensed or mid-filing in California will need to revisit their submissions once the Department of Managed Health Care finalizes its new framework. Updated forms, fee structures, and reporting requirements—expected by late 2026—will effectively reset the process. Applications submitted under prior rules may need amendments or entirely new filings. 

California’s approach gives other states a blueprint they are almost certain to adapt, each adding its own timelines, definitions, and reporting layers. 

For national PBMs, that means compliance can no longer be treated as a series of one-off transactions. It must become an operating capability that can flex with evolving rules and respond before enforcement arrives. 

Legislators are sending a message: those that shape the cost of care must be transparent, accountable, and ready to prove it. The organizations that build adaptability into their infrastructure will be able to adapt to these shifts with confidence. Those that wait for clarity might find themselves outpaced by the pace of regulation itself.