A bipartisan coalition of state attorneys general, including all fifty states, the District of Columbia, and Puerto Rico, is urging the U.S. Department of Labor to tighten oversight of pharmacy benefit managers, arguing in a letter that federal regulators should close loopholes that allow opaque pricing practices to drive up prescription drug costs for patients, employers and public health plans.
“PBMs have significantly expanded their role in the healthcare system,” the letter, signed by AG Sunday, stated. “Today, the top three PBMs manage approximately eighty percent of prescription drug claims.”
“Due to the power imbalance held by the PBMs and the negative effects of such power on drug pricing, all fifty states in the union, the District of Columbia, and Puerto Rico have enacted laws to rein in PBMs.”
Pharmacy benefit managers started as claims processors but now sit at the center of prescription-drug benefit design, rebate negotiations, pharmacy reimbursement, and formulary management. That expanded role has made PBM oversight a major state policy priority, with PBM regulation accounting for more than half of enacted state prescription-drug legislation from 2017 through 2025 and all 50 states enacting at least one PBM law since 2016, according to the National Academy for State Health Policy.
Pennsylvania’s 2024 PBM reform law targeted rebate practices, reimbursement problems, patient steering, clawbacks, and weak network adequacy, showing how broad the state viewed PBM-related harm. The law expanded regulatory authority and now requires annual PBM transparency and network reports, signaling that the state saw existing PBM practices as opaque enough to require ongoing oversight.
The three largest PBMs handle about 80% of U.S. prescription claims, giving a small number of firms outsized influence over which drugs are covered, how pharmacies are paid, and how rebates move through the supply chain. The Federal Trade Commission has described the sector as increasingly concentrated and vertically integrated, linking that market structure to higher barriers for independent pharmacies and weaker visibility into pricing practices.
KFF also notes PBM rebate arrangements can encourage higher list prices, which can increase out-of-pocket costs for people who are uninsured or pay coinsurance tied to list price.
Dave Sunday took office as Pennsylvania attorney general in January 2025 after spending years as a prosecutor in York County. He served in the York County District Attorney’s Office beginning in 2009, later became district attorney, supervised major crime and felony narcotics matters, and also worked as legal adviser to the county drug task force and SWAT team before his statewide election.
