By: HUB’s EB Compliance Team
State regulation of Pharmacy Benefit Managers (“PBM”) has been a growing trend for several years. All 50 states now have one or more rules regulating PBMs, and many states with existing PBM regulations are looking to expand these rules. Along these lines, Illinois recently enacted HB 1697, which requires PBMs to pay an annual fee of $15 per individual enrolled.
PBM Fee
Many of the provisions of Illinois HB 1697 are similar to cost control provisions enacted by other states. These include prohibitions on steering to affiliate pharmacies, restrictions on designating medications as “specialty” unless they meet certain requirements, prohibiting spread pricing and requiring the pass through of 100% of any rebates. Multistate employers may already be familiar with these types of provisions.
Where Illinois breaks new ground is by assessing an annual fee of $15 per member on PBMs covering participants in the state. The fee is effective starting January 1, 2026, and is intended to fund grants for pharmacies in underserved and low-income areas. This is unlike legislation previously seen in other states.
Budgets and Next Steps
Since the fee is applicable to PBMs rather than health plans, PBMs will be responsible for paying the annual fee. The fee will likely be passed through to plan sponsors, who should budget appropriately and work directly with their PBMs to understand when and how these fees will be assessed. Plans changing PBMs at their next renewals will also want to understand how their new PBMs will address this fee.
Conclusion
While this requirement currently applies only to plans covering employees in Illinois, it’s important for all employers to stay informed. Organizations without current Illinois employees should remain aware — particularly if they are considering expansion into the state or anticipate acquiring Illinois-based employees in the future.
Moreover, as we've seen with other PBM regulations and paid leave mandates, state-level policies often inspire similar legislation elsewhere. While there's no certainty, it's entirely possible that other states may follow Illinois’ lead. Proactive awareness and planning now can help mitigate compliance risks and unexpected costs down the road.
If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory.
NOTICE OF DISCLAIMER
Neither HUB International Limited nor any of its affiliated companies is a law or accounting firm, and therefore, they cannot provide legal or tax advice. The information herein is provided for general information only and is not intended to constitute legal or tax advice as to an organization’s or individual's specific circumstances. It is based on HUB International's understanding of the law as it exists on the date of this publication. Subsequent developments may result in this information becoming outdated or incorrect, and HUB International does not have an obligation to update this information. You should consult an attorney, accountant or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your or your organization’s particular needs.