California Gov. Newsom Signs Measure on Drug-Price Middlemen

California Gov. Gavin Newsom (D) signed legislation Saturday to place tighter rules on drug-pricing middlemen who have become a target of bipartisan frustrations over prescription costs.

The new law (SB 41) prohibits several practices common among pharmacy benefit managers, which are the companies that manage prescription drug benefits for insurers and large employers. The measure bans spread pricing, which is when a PBM charges a health plan more for a drug than it pays a pharmacy.

Pharmacists lobbied heavily for the bill, arguing PBMs have pushed independent drugstores out of business and driven up prices. Several states have ...