Delaware Department of Insurance announces completion of PBM exams

DELAWARE-  Following the unanimous passage of legislation in 2021, the Delaware Department of Insurance was given regulatory authority over Pharmacy Benefit Managers (PBMs) and has been building an investigation and enforcement program in order to address the multi-billion-dollar industry that has played a key role in increasing total cost of care and consolidating the pharmacy market.

Insurance Commissioner Trinidad Navarro announced the department has completed some of the nation’s first examinations of PBMs, with more exams in progress.

“Protecting consumers from unjustified pharmaceutical costs and pharmacy monopolies is a key method of addressing the rising total cost of care in Delaware, and across the country. Creating transparency and accountability around PBMs is vital, and we are working hard to investigate and improve compliance with Delaware law,” said Commissioner Navarro, adding “Now that we’ve completed at least the initial stages, we’re going to determine what they’ve done wrong, we’ve determined potential solutions and in the future, real consequences. So the challenge was to uncover in a regulatory environment what we already knew  was happening.”

PBMs act as intermediaries for prescription drug plans, influencing what medications will be covered and the costs of those drugs for both consumers and pharmacies. These companies bring in billions through manufacturer rebates, limiting generic drug offerings, and retaining negotiated savings, while costs for consumers continue to rise. The largest PBMs operate their own pharmacy chains, and their consolidated market power has allowed them to pay unaffiliated pharmacies unsustainably low reimbursement rates – rates lower than it costs the pharmacy to dispense the drug to a consumer.

Navaro says the exams will be used to enforce existing guidelines and best practices, as the industries were unregulated prior to 2021 in Delaware.