California’s PBM Fiduciary Law Faces an ERISA Challenge – Why This Matters for Independent Pharmacies and Patients

In October 2025, Buchanan wrote about California’s passage of SB 41 as a positive and meaningful step forward in pharmacy benefit manager (PBM) reform, particularly for independent pharmacies and patient access to care. The law, which was signed by Governor Gavin Newsom and set to take effect on January 1, 2026, sought to address long-standing PBM issues and business practices in California and detected by other states throughout the country. The law is set to address these issues by imposing greater accountability and transparency.

However, on January 2, 2026, that progress hit a familiar obstacle. The Pharmaceutical Care Management Association (PCMA) filed a federal lawsuit challenging SB 41, including some of the most consequential provisions, such as those that imposed a fiduciary duty on PBMs servicing self-insured employer plans.

The case, Pharmaceutical Care Management Association v. Bonta, squarely raises a critical issue at the intersection of PBM regulation, ERISA preemption and pharmacy access — and it has real implications for independent pharmacies nationwide.

Why SB 41 Was a Big Deal in California

SB 41 stood out because it went beyond surface-level PBM regulation. California did not merely require reporting or licensure – it attempted to change incentives.

Under SB 41, PBMs servicing self-insured employer plans were required to:

Act in the best interests of their client
Be fair and truthful
Avoid conflicts of interest
Perform duties with care, skill, prudence and diligence.

Although this provision was focused on the relationship between certain health insurance plans, the implications went beyond the plans with the potential for positive change for patients and independent pharmacies. In fact, for independent pharmacies, this framework promised something potentially meaningful: PBM decision-making aligned with patient access and fair pharmacy participation, rather than steering, spread pricing and vertical integration.

In short, SB 41 treated PBMs less like unregulated intermediaries and more like accountable healthcare intermediaries.

What PCMA Is Challenging – and Why

PCMA’s lawsuit does not attack all of SB 41. Instead, it targets the fiduciary duty provision, arguing that it is preempted by ERISA, the federal law governing employer-sponsored health plans. This is one of PCMA’s established legal tactics in challenging laws seeking reasonable regulation of PBMs. PCMA’s position is that:

ERISA exclusively governs who is a fiduciary to an employer health plan
PBMs are typically non-fiduciary administrative service providers under federal law
States cannot redefine fiduciary status for self-insured employer plans without violating ERISA’s uniform framework.

In other words, PCMA argues that California crossed a legal line by imposing state-law fiduciary duties on PBMs in the ERISA context.

Why This Matters for Independent Pharmacies

For independent pharmacies, this lawsuit highlights a recurring and frustrating reality:

When states attempt meaningful PBM reform, ERISA often becomes the battleground.

SB 41 reflected growing legislative recognition that PBM business models – including network steering, reimbursement pressure and conflicts tied to PBM-owned pharmacies – directly impact (i) Pharmacy access; (ii); Patient choice and (iii) the sustainability of community pharmacies. If PCMA succeeds, California may be limited in its ability to impose fiduciary accountability on PBMs servicing self-insured plans – which cover a large portion of the commercial market.

That outcome would not invalidate the policy rationale behind SB 41, but it would constrain one of its most powerful tools.

What This Lawsuit Does Not Mean

This case does not mean that PBM reform is dead, that independent pharmacy concerns lack merit, or that California’s state regulators were wrong to focus on PBM conflicts of interest. Rather, it reinforces a key takeaway: lasting and sustainable PBM reform may ultimately require federal action and not just state based regulation.

The Bigger Picture

PCMA v. Bonta will be closely watched across the country. States considering PBM fiduciary standards, conflict-of-interest rules, or enhanced PBM oversight will study California’s experience carefully. For independent pharmacies and patient advocates, the core question remains unchanged: Should PBMs be permitted to operate without enforceable duties to act in the best interests of plans, pharmacies and patients? California answered that question decisively. The courts will now decide how far states are allowed to go in implementing that answer.

Final Thought

SB 41 represented optimism that states can meaningfully address PBM practices that affect patient access and independent pharmacy viability. The PCMA lawsuit does not erase that optimism, but it does remind us that PBM reform still remains contested terrain led by PCMA’s efforts to combat any laws that stand to impose real duties, obligations, or limitations on PBMs heretofore unfettered discretion.

For independent pharmacies, staying engaged in both policy and litigation has never been more important.