North Carolina Enacts SCRIPT Act: A Transformational Law Reshaping PBM Practices, Transparency, and Consumer Protection
On July 10, 2025, a pivotal shift unfolded in the healthcare landscape of North Carolina. Governor Josh Stein officially signed into law the Act Supporting Community Retail Pharmacies and Improving Transparency, more commonly known as the SCRIPT Act. With its sweeping reforms aimed at reining in pharmacy benefit managers (PBMs), bolstering pharmacy choice, enhancing drug price transparency, and directing cost-savings back to consumers, the SCRIPT Act marks a defining moment in state-level healthcare regulation.
This monumental legislation places North Carolina alongside a growing coalition of states intent on curbing opaque PBM practices and restoring equilibrium between insurers, pharmacies, and the public they serve.
🧭 Overview of the SCRIPT Act: A Landmark in PBM Oversight
The SCRIPT Act is multifaceted in scope and meticulous in its legislative crafting. It sets forth stringent regulatory requirements for PBMs operating in the state, imposes new disclosure mandates, restricts practices that limit consumer pharmacy choice, and mandates that drug manufacturer rebates be substantially passed through to patients.
While certain provisions become enforceable as early as October 1, 2025, others are staggered across the 2026 and 2027 calendar years, providing phased implementation and compliance timelines.
🏥 Empowering Patient Choice: The SCRIPT Act’s Pharmacy Access Provisions
A major cornerstone of the legislation is its commitment to protecting consumer autonomy in selecting pharmacy providers. The Act includes a robust set of provisions that prohibit PBMs from engaging in restrictive or coercive practices that compromise patient freedom.
🚫 Key Prohibitions on PBM Practices:
Barring Pharmacy Selection Freedom: PBMs may no longer prevent insured individuals from choosing any in-network pharmacy that has agreed to participate under the terms of the health plan.
Discriminatory Participation Denial: If a pharmacy agrees to reimbursement terms, the PBM must permit it to operate as a network provider. Denial based solely on ownership status or business model is disallowed.
Unfair Cost-Sharing Structures: The law forbids PBMs from implementing cost-sharing models that financially penalize consumers for choosing certain pharmacies within the plan network.
Patient Steering through Incentives: Any monetary incentives used to sway a consumer toward a PBM-preferred or affiliated pharmacy are expressly prohibited.
Reduced Reimbursement for Independent Pharmacy Use: PBMs are forbidden from decreasing reimbursement rates when a patient opts for a pharmacy outside of PBM control or ownership.
Mandatory Mail-Order Restrictions: The law also disallows PBMs from compelling consumers to obtain prescriptions through mail-order pharmacies exclusively.
These provisions apply to insurance agreements entered into on or after October 1, 2025, reinforcing the principle that pharmacy access should be driven by patient preference—not PBM convenience.
🧩 Oversight of PSAOs: Regulating the Middlemen of Independent Pharmacies
The SCRIPT Act doesn't stop at PBMs; it also delves into the regulatory realm of Pharmacy Services Administrative Organizations (PSAOs). These entities act as intermediaries between independent pharmacies and PBMs, often consolidating negotiating power on behalf of small pharmacies.
🔍 Key PSAO Regulatory Measures:
Anti-Coercion Clause: PSAOs are now prohibited from requiring pharmacies to purchase more expensive medications or inventory from specified wholesalers as a condition of network inclusion.
Transparency in Ownership: PSAOs must disclose their ownership structures to the North Carolina Department of Insurance, bolstering transparency and accountability.
The PSAO-related provisions are slated to apply to contracts initiated or renewed on or after October 1, 2026, affording PSAOs and pharmacies time to realign operational strategies with the law’s mandates.
📊 Expanded Reporting Requirements for PBMs: A New Era of Transparency
Transparency lies at the heart of the SCRIPT Act’s legislative vision. To achieve that, the law introduces rigorous annual reporting requirements for PBMs, creating data pipelines that allow regulators to scrutinize industry behaviors more effectively.
📈 Mandated Reporting Disclosures:
Aggregate Rebates: Total volume of manufacturer rebates received by the PBM.
Spread Pricing Profits: The difference between what PBMs bill insurers and what they pay pharmacies—commonly known as spread pricing—must now be reported in full.
Fees Imposed on Pharmacies: All fees levied on contracted pharmacies must be itemized and aggregated.
Rebate Distribution: Disclosure of the proportion of rebates passed along to insurers or directly to consumers is mandatory.
These requirements will apply to contracts signed on or after October 1, 2025, and will be submitted to the Commissioner of Insurance, allowing oversight authorities to assess financial practices that have long been shrouded in secrecy.
💰 Reforming Pharmacy Reimbursement Rates: Fair Pay Across the Board
The SCRIPT Act also addresses the long-standing issue of unequal reimbursement practices, especially where PBM-owned or affiliated pharmacies receive preferential treatment compared to independent counterparts.
⚖️ Equal Pay Mandates:
Affiliation Parity: PBMs are prohibited from reimbursing unaffiliated pharmacies at lower rates than they reimburse their own affiliate pharmacies for the same drug or service.
Pharmacy Desert Protection: In an effort to mitigate disparities in underserved regions, PBMs may not reimburse pharmacies in "pharmacy deserts" or independent drugstores below their acquisition costs, ensuring that essential medications remain financially viable to stock and dispense.
These stipulations become operative for pharmacy services rendered on or after October 1, 2025, and serve as a bulwark against predatory pricing models that threaten the survival of local, independent pharmacies.
💸 Mandated Rebate Pass-Through to Consumers: 90% Rule for Cost Savings
In a significant win for consumers, the SCRIPT Act mandates that 90% of all drug rebates secured by PBMs be directly applied to reduce patients’ out-of-pocket costs at the point of sale.
💡 Key Provisions:
Point-of-Sale Benefit: Patients will receive the benefit of rebates immediately, effectively lowering their co-payments or deductible impact.
Annual Attestation: Insurers must file a formal attestation of compliance with the 90% rule to the state’s Department of Insurance by January 1 each year.
This rebate transparency and sharing requirement will come into effect for prescription medications purchased on or after January 1, 2027, aligning with broader efforts to curb drug price inflation at the retail level.
🔎 Pharmaceutical Pricing Transparency: Manufacturer Disclosures and Price Hikes
Another groundbreaking element of the SCRIPT Act targets prescription drug manufacturers, demanding proactive disclosures on pricing strategies that affect both insurers and consumers.
📋 Manufacturer Obligations:
Annual Price Hike Reports: Drugmakers must notify interested stakeholders by January 1 of each year if any existing drug—costing $100 or more per 30-day supply—has undergone a price increase of 15% or more in the preceding year.
New Drug Notifications: Any newly released drug must be reported within 3 days of market availability, including its launch price and dosage specifications.
Effective Timeline:
Price hike disclosures begin on January 1, 2026
New drug notifications are already immediately enforceable
This level of manufacturer accountability seeks to demystify the pharmaceutical pricing ecosystem, providing greater clarity for policymakers, insurers, and the public.
🧩 Applicability Under ERISA: The Looming Question for Self-Funded Plans
A pivotal component of the SCRIPT Act's future lies in its interaction with federal law, particularly the Employee Retirement Income Security Act (ERISA). While the law explicitly applies to a broad range of fully insured plans, its enforceability over self-funded employer plans remains uncertain due to ERISA’s federal preemption doctrine.
⚖️ Legal Context:
SCOTUS Precedent: In Rutledge v. Pharmaceutical Care Management Association (2020), the U.S. Supreme Court held that state laws regulating PBM reimbursement to pharmacies are not preempted by ERISA.
10th Circuit Ruling (2023): Conversely, a federal appellate court struck down elements of an Oklahoma PBM law, finding that provisions regulating network design were preempted by ERISA. The Supreme Court declined to hear the appeal in June 2025, leaving the circuit decision intact.
🚦 Current Legal Gray Zone:
Due to the fragmented legal landscape, the exact applicability of the SCRIPT Act to self-funded employer health plans is unsettled. As of now, only fully insured plans are definitively covered, leaving ERISA-preempted plans in a regulatory limbo.
🧭 Employer Action Plan: What Should Employers Do Next?
Employers in North Carolina—and potentially beyond—must begin preparing for compliance, particularly as key provisions begin to activate in late 2025.
✅ For Fully Insured Employers:
Minimal Direct Action Required: Insurance carriers bear the compliance burden, including rebate sharing, pharmacy access, and reporting mandates.
🧠 For Self-Funded Plan Sponsors:
Initiate Dialogue with PBMs/TPAs: Engage with your third-party administrators or PBMs to understand:
Whether SCRIPT Act provisions are being voluntarily adopted
Whether legal analysis supports application to self-funded plans
Legal Review Recommended: Given the ERISA preemption complexities, employers should consult ERISA counsel to assess any exposure, especially in multi-state operations.
🌎 A National Trend: State-by-State Push for PBM Reform
North Carolina’s SCRIPT Act is not an isolated initiative. It represents a broader national movement by states taking matters into their own hands due to inaction at the federal level.
🏛️ Key Legislative Themes Across States:
Banning Spread Pricing
Mandating Rebate Transparency
Strengthening Pharmacy Choice Protections
Enhancing Reporting to State Insurance Commissions
These efforts underscore a growing consensus that PBMs have outgrown their original administrative purpose, now acting as financial gatekeepers with disproportionate market influence.
🧾 Conclusion: SCRIPT Act Signals a Paradigm Shift in Pharmacy Benefit Regulation
With the passage of the SCRIPT Act, North Carolina has firmly positioned itself as a policy pioneer in pharmacy benefit reform. By prioritizing transparency, fairness, and patient empowerment, the law serves as a powerful template for other jurisdictions seeking to reclaim integrity in the healthcare delivery chain.
While legal uncertainties remain—especially regarding ERISA preemption—the broader trend is unmistakable: States are no longer waiting for Washington to act. Through bold, meticulous legislation like the SCRIPT Act, they are asserting their right to protect consumers, preserve independent pharmacies, and ensure that healthcare dollars deliver real value to those who need it most.