Criminal procedure: sentencing.

The full statutory text of the bill, including amendments to Penal Code sections 236.14 (vacatur relief for human trafficking victims), 236.15 (vacatur relief for intimate partner violence and sexual violence victims), 236.23 (affirmative defense for human trafficking victims), and 236.24 (affirmative defense for IPV/sexual violence victims), along with the legislative counsel's digest, was removed from the document.

Website navigation elements (header links, search fields, version history sidebar, share buttons, and page metadata) were added in place of the bill text, indicating the 'to' version captured a webpage wrapper rather than the underlying document content.

The standard of care for pharmacy benefit managers was elevated from 'good faith and fair dealing' to a fiduciary duty that must be carried out in accordance with state and federal law, imposing a higher legal obligation on PBMs toward health plans.

New requirement that PBMs remit 100 percent of all rebates, fees, alternative discounts, and other remuneration received from manufacturers or related entities to the health care service plan, solely for offsetting member cost-sharing (copays, deductibles, coinsurance) and reducing premiums. PBMs are also prohibited from contracting with affiliated entities unless 100 percent pass-through is guaranteed.

New Section 1385.008 prohibits PBMs, group purchasing organizations, and affiliated entities from deriving any income from spread pricing (the practice of charging plans a price higher than what is paid to pharmacies).

New Section 1385.008 restricts PBM compensation to bona fide service fees only, defined as fair market value for itemized services actually performed. Fees may not be based on drug acquisition cost, the amount of rebates or savings collected, or premiums and cost-sharing charged to patients. Flat performance bonuses are permitted if not tied to drug price and related to actual services.

New Section 1385.005 requires PBMs to disclose the name, address, and relationship of any affiliated entity or group purchasing organization in which they hold ownership, control, financial interest, or a contractual relationship as part of their registration application.

The annual reporting requirement in Section 1385.007 was expanded to include detailed per-drug financial data: aggregate wholesale acquisition costs from manufacturers, aggregate rebates received by the PBM and its GPOs and affiliates, administrative fees from manufacturers, payments to pharmacies owned or controlled by the PBM versus independent pharmacies, and net amounts paid per prescription after fees and assessments.

New Section 1385.001 defines 'affiliated entity' (including GPOs, manufacturers, distributors, rebate aggregators, subsidiaries, and subcontractors), 'group purchasing organization' (including out-of-state and international entities under common ownership or control with a PBM), 'rebates' (broadly defined to include incentive rebates, credits, market share incentives, promotional allowances, commissions, educational grants, and formulary placement fees), and 'spread pricing.'

The bill's scope was broadened from regulating only pharmacy benefit managers to explicitly covering group purchasing organizations and affiliated entities throughout the rebate pass-through, spread pricing prohibition, compensation restrictions, and reporting requirements.

The fiscal committee determination changed from 'no' to 'yes' and the state-mandated local program designation changed from 'no' to 'yes,' indicating the bill now triggers additional fiscal review and local government cost implications.

New Section 1385.0021 establishes confidentiality protections for records filed by PBMs with the DMHC, exempting corporate financial records, applications, and other submissions from the California Public Records Act, while requiring disclosure to the Attorney General upon request for legal proceedings.

The bill's title and legislative digest now explicitly reference Sections 127673.7 and 127674.1 of the Health and Safety Code and add 'pharmacy benefit management' as a stated subject, reflecting the expanded scope to include HCAI's Health Care Payments Data Program provisions.

Section 127673.7 is amended to require the Department of Health Care Access and Information to include data on prescription drug pricing, fees paid for PBM services, and payments or rebates to/from PBMs in its annual analysis, contingent on completion of regulations under Section 127673.05.

The DMHC is now required to post on its internet website links to analyses and reporting published by HCAI regarding PBMs pursuant to Sections 127673.7 and 127673.8, creating a public transparency obligation tied to the inter-agency data sharing.

Section 127674.1 is amended to require HCAI to notify the DMHC when a pharmacy benefit manager fails to comply with the chapter, and requires the DMHC to take appropriate action to bring the PBM into compliance. Previously, only health care service plans and health insurers were subject to this notification mechanism.

New Section 1385.007 requires PBMs to annually report to the department by October 1 (starting 2026): the 100 most costly drugs, 100 most frequently prescribed drugs, 100 highest revenue-producing drugs, pharmacy type for each, and detailed pricing/rebate breakdowns showing what manufacturers pay, what PBMs pass to health plans, what health plans pay PBMs, and what PBMs pay pharmacies.

PBMs must also report their contracts with health plans, scope of services, number of enrollees served, total revenue (from manufacturers, health plans, pharmacies, other sources), and total expenses (payments to pharmacies, claims processing, special programs, administration, other).

Section 1385.004(a)(1) was changed from requiring PBM compliance with 'the provisions of Section 1385.003' to compliance with 'Section 1385.003 and Section 1385.007,' incorporating the new reporting obligations into the contractual requirements health plans must impose on PBMs.

The department must compile reported data into an aggregated public report demonstrating drug cost impact on premiums, PBM market impact, and value to consumers. The report must be published on the department website by January 1 each year starting 2027 and included in a required public meeting.

All information submitted to the department under the new section is kept confidential and exempt from the California Public Records Act, except for the aggregated public report. Legislative findings justify this limitation as necessary to protect confidential and proprietary PBM information.

A 'specialty drug' is defined as one exceeding the threshold for a specialty drug under the Medicare Part D program (Public Law 108-173).

Fiscal note changed from 'Fiscal committee: no' to 'yes' and 'State-mandated local program: no' to 'yes,' reflecting that the new criminal penalty provisions trigger state-mandated local program analysis, though no reimbursement is required.