Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the Legislature. LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
F I S C A L I M P A C T R E P O R T
SPONSOR Rep. Stefanics
/Sen. Thomson
LAST UPDATED
ORIGINAL DATE 2/5/2025
SHORT TITLE Pharmacy Benefit Manager Fees
BILL
NUMBER Senate Bill 62
ANALYST Esquibel
REVENUE*
(dollars in thousands)
Type FY25 FY26 FY27 FY28 FY29
Recurring or
Nonrecurring
Fund
Affected
See Fiscal
Implications
See Fiscal
Implications
See Fiscal
Implications
See Fiscal
Implications
See Fiscal
Implications
Recurring
Insurance
Premium
Taxes,
Insurance
Premium
Surcharge
Taxes, GRT
Parentheses ( ) indicate revenue decreases.
*Amounts reflect most recent analysis of this legislation.
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT*
(dollars in thousands)
Agency/Program
FY25 FY26 FY27
3 Year
Total Cost
Recurring or
Nonrecurring
Fund
Affected
OSI $195.0 $195.0 $390.0 Recurring General Fund
NMPSIA Up to $1,516.0 Up to $60,064.0 Up to $65,188.0
Up to
$126,768.0
Recurring
NMPSIA
Benefits Fund
RHCA Up to $543.0 Up to $21,425.0 Up to $23,202.0
Up to
$45,170.0
Recurring
RHCA Benefits
Fund
HCA State Health
Benefit Plan
Indeterminate Indeterminate Indeterminate Indeterminate
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Sources of Information
LFC Files
Agency Analysis Received From
Department of Health (DOH) Health Care Authority (HCA) New Mexico Attorney General (NMAG) New Mexico Public Schools Insurance Authority (NMPSIA)
New Mexico Retiree Health Care Authority (RHCA)
Office of Superintendent of Insurance (OSI)
University of New Mexico Health Sciences Center (UNM-HSC)
Agency Analysis was Solicited but Not Received From
Albuquerque Public Schools (APS) Senate Bill 62 – Page 2
SUMMARY
Synopsis of Senate Bill 62
Senate Bill 62 (SB62) would amend the Pharmacy Benefits Manager Regulation Act to restrict
the types of fees that pharmacy benefits managers (PBMs) can collect and to declare certain
actions by PBMs as unfair or deceptive trade practices.
Proposed Definitions
Bona Fide Service Fee: Defined as a flat dollar amount, consistent with fair market value,
and solely related to the provision of pharmacy benefits management services.
Conflict of Interest: Defined as a situation where a PBM or its affiliate derives any
remuneration other than a bona fide service fee from providing pharmacy benefits
management services.
Proposed Licensure Requirements
Licensure requirements would apply to any person who provides pharmacy benefit
manager (PBM) services, in addition to those operating as a PBM within the current
statute.
The person or PBM must be licensed by the Office of Superintendent of Insurance and
renew their licenses annually.
The Superintendent of Insurance would gain the authority to enforce rules, suspend or
revoke licenses, or deny applications if PBMs have a conflict of interest.
To the extent a PBM fails to comply with the Superintendent of Insurance order to
conclude pharmacy benefits manger’s affairs, it would constitute an unfair or deceptive
trade practice in violation of the New Mexico Unfair Practices Act.
This bill does not contain an effective date and, as a result, would go into effect 90 days after the
Legislature adjourns if enacted, or June 20, 2025.
FISCAL IMPLICATIONS
Multiple states have implemented PBM legislation resulting in substantial cost savings (see
“Other Substantive Issues”).
Office of Superintendent of Insurance (OSI) Fiscal Implications
OSI reports it would incur costs related to the enforcement and administration of the new
regulations, including the processing of additional licenses, renewals, and the investigation of
complaints or violations. OSI would require 2 additional FTE at a projected cost of $195
thousand. Additional indeterminate costs may be incurred for legal actions and enforcement of
the new rules, including potential litigation if PBMs challenge the regulations.
New Mexico Public Schools Insurance Authority (NMPSIA) Fiscal Implications
Under the provisions of the bill, NMPSIA reports a projected $7.1 million loss with an
anticipated recurring annual increase of 9 percent for the loss of reimbursed fees along with
added fees to the plan. NMPSIA’s cost savings program Prudent Rx could be discontinued, Senate Bill 62 – Page 3
resulting in a $3.2 million loss with an anticipated recurring annual increase of 8 percent.
Rebates and point of sale rebates could be impaired, creating a $49.7 million loss in rebates with
an anticipated recurring annual increase of 8.5 percent. The total anticipated impact for NMPSIA
is a $60 million loss in FY26, with estimated recurring losses of 25.5 percent in subsequent
years.
Retiree Health Care Authority (RHCA) Fiscal Implications
RHCA reports its rebate estimates were projected based on calendar year 2024 rebates. The cost
implications noted below were determined only for the RHCA commercial members (pre-
Medicare retirees), given that employer group waiver plans and Medicare plans are governed by
federal rules under the Centers for Medicare and Medicaid Services. In addition to the total plan
costs to RHCA, the agency also notes the potential cost implications to plan members with the
elimination of the SaveOnRx and Smart90 programs, along with possible fiscal impacts to
RHCA’s Narrow Network and Mail Parity programs
.
Health Care Authority State Health Benefits Program Fiscal Implications
HCA reports the bill could affect fundamental changes to PBMs in New Mexico. These changes
could be temporarily disruptive to state health benefit plan members regarding new formularies,
mail order providers, prior authorization requirements, and other factors. The member cost
impact is indeterminate dependent on how OSI would implement the provisions of the bill.
Senate Bill 62 – Page 4
Tax Fiscal Implications
The projected costs delineated above to NMPSIA, RHCA, State Health Benefit, and Medicaid
health insurance plans could result in reductions to health insurance premium taxes, health
insurance premium surcharge taxes, and gross receipts taxes.
SIGNIFICANT ISSUES
The primary intended effect of this bill would be to prohibit PBMs or their affiliates from
collecting a percentage of the rebates they negotiate for their health plan payor clientele.
OSI notes the bill does not directly prohibit practices such as spread pricing or rebate retention.
The language as proposed may be too vague to prevent PBM’s from continuing to participate in
these practices, in addition to basing fees on or making fees contingent upon drug price, drug
benchmark price, discounts, rebates and or fees.
NMPSIA notes the bill could impact cost-saving programs, resulting in increased out-of-pocket
costs for members or additional financial obligations for NMPSIA plans, depending on the tier of
medication. Implementation of the legislation could require potential IT system overhauls and
infrastructure modifications to accommodate the new requirements. These costs, though
presently unquantifiable, potentially represent significant liabilities for NMPSIA’s members.
Also, the current pricing model avoids per-claim administrative fees, but the proposed legislation
provides opportunity for PBMs to impose administrative fees that could increase costs for
members.
RHCA indicates the bill, as written currently, is unclear how it would affect rebates, cost savings
programs, and clinical wellness programs.
PERFORMANCE IMPLICATIONS
The Attorney General’s Office notes the bill would expand the purview of the Unfair Practices
Act, therefore expanding the enforcement responsibilities of the Attorney General.
TECHNICAL ISSUES
The Office of Superintendent of Insurance notes the bill provides that a pharmacy benefits
manager's (PBMs) failure to comply with the superintendent's order to conclude the PBM’s
affairs shall constitute an unfair or deceptive trade practice pursuant to the Unfair Practices Act.
This new language should be changed to reference the Trade Practices and Fraud contained in
Article 16 of the Insurance Code.
The Office of Superintendent of Insurance reports the term “fair market value” as stated within
the definition for “bona fide service fee” is not defined and may be too vague for enforcement
purposes.
The Office of Superintendent of Insurance proposes the following amendments to Section 1,
amending Section 59A-61-2, adding definition for “bona fide service fee”:
A. “bona fide service fee” means a fee charged by a pharmacy benefits manager that is: Senate Bill 62 – Page 5
1. a flat dollar amount;
2. consistent with fair market value;
3. solely related to the provision of pharmacy benefits management services; shall not be
directly or indirectly based on or contingent upon:
a. drug price or drug benchmark price;
b. the amount of discounts, rebates, fees, and or other direct or indirect remuneration
with respect to prescription drugs prescribed to the participants, beneficiaries, or
enrollees; or
c. any other amount prohibited by the Superintendent.
4. solely related to the provision of pharmacy benefits management services.
The Office of Superintendent of Insurance proposes the following amendment to Section 2(D):
D. If the license of a pharmacy benefits manager is revoked, the pharmacy benefits
manager shall proceed, immediately following the effective date of the order of
revocation, to conclude its affairs, notify each pharmacy in its network and conduct no
further pharmacy benefits management services in the state, except as may be essential to
the orderly conclusion of its affairs. The superintendent may permit further operation of
the pharmacy benefits manager if the superintendent finds it to be in the best interest of
patients. A pharmacy benefits manager's failure to comply with the superintendent's order
to conclude the pharmacy benefits manager's affairs shall constitute an unfair or
deceptive trade practice under to Section 59A-16-3 of the Insurance Code.
The Attorney General’s Office reports the use of “conflict of interest,” while the term is defined
in the statute, may be a bit confusing and imprecise as it is a phrase used colloquially with
significantly different meaning.
OTHER SUBSTANT IVE ISSUES
The Department of Health reports, according to the National Academy for State Health Policy,
all 50 states have passed legislation regarding pharmacy benefits managers (PBMs). There are 30
states that have legislation requiring licensure and registration of PBMs and 16 states prohibit
spread pricing, requiring the PBM to charge the same amount to the health plan as the dispensing
pharmacy. An additional 35 states limit the amount a patient has to pay, and two states have
legislation where the PBM has a fiduciary duty to the health plan, requiring reporting for
conflicts of interest.
1
Alaska has legislation for fair pricing and reporting of any conflicts of interest. Indiana has
legislation requiring PBMs to disclose any received remuneration from a drug manufacturer.
California, Idaho, Indiana, Iowa, Massachusetts, New Jersey, Utah, Virginia, and West Virginia
have legislation that requires PBMs to disclose all fees required of the PBM. Virginia includes
legislation requiring a daily civil penalty for failure to report. Pennsylvania and Maryland have
legislation that prevents a PBM from keeping any remuneration fees owed to the payer. Texas
has a PBM governed by the Texas Pharmaceutical Initiative that is required to provide fair and
equitable pricing for any pharmacy joining its PBM.
2
RAE/hj/hg
1
https://nashp.org/state-tracker/state-pharmacy-benefit-manager-legislation/#overview
2
https://nashp.org/state-tracker/state-drug-pricing-laws-2017-2024