Alabama’s New PBM Law: One Unexpected Potential Impact for Consumers

On October 1, 2025, Alabama Act 2025-136, known as the Community Pharmacy Relief Act takes effect. The bill, titled the "The Community Pharmacy Relief Act," further regulates pharmacy benefits managers (PBMs) in the state.

This law will require PBMs to reimburse independent pharmacies at least the Alabama Medicaid Agency rate to pharmacies for prescription drugs. One goal of the legislation is to increase the amount paid to independent pharmacists for the drugs they dispense.

Chris Kimble, partner in Balch & Bingham’s Health Law Practice, answers key questions consumers are asking about the impact of SB252. Chris’s practice focuses on the litigation of healthcare-related issues, including insurance disputes, provider reimbursement, fraud and abuse, False Claims Act, contract disputes, and federal and state regulated insurance programs. 

What is a pharmacy benefit manager and what does it do? 

PBMs are companies that act as intermediaries in the prescription drug supply chain. They negotiate with drug manufacturers for discounts and process prescription drug claims. Employers and insurers enter contracts with PBMs to manage prescription drug benefits for their health plans. 

Consumers may notice a price difference for their prescriptions at independent pharmacies beginning October 1, when a new PBM law takes effect. Why is this?

PBMs must start paying the Medicaid reimbursement rate for prescriptions filled by an independent pharmacy, which may be significantly higher than the rate the PBM negotiated with the pharmacy before October 1. 

Why could the person’s out-of-pocket cost for a prescription go up after October 1, even if their cost-sharing has not changed?

The new law prohibits PBMs from increasing an insured’s cost-sharing (that is the deductible, copayment, or coinsurance), or by requiring any other out-of-pocket payment as a means to recoup the dispensing cost of the drug. But the law does not change the cost-share formula already in place.  

Can you offer an example of how this works? 

Take one of my prescriptions, for example, and assume I have a $15 copay for generic drugs. That means I pay up to $15 for a generic prescription before my insurance kicks in to pay the rest.  One of my prescriptions currently costs me $1.98 for a 30 day supply.  If I purchase that prescription at an independent pharmacy after October 1, my cost will increase to almost $12, which is the Medicaid rate. Since my insurance only kicks in at $15, it covers none of that increase.