HB 1665 Explained: A Side-by-Side Comparison of the House and Senate Versions

The real solution is not more regulation of the drug market, but less government interference in it.

Mississippi lawmakers are debating two different versions of House Bill 1665, legislation that would significantly change how pharmacy benefit managers (PBMs) are regulated in the state. While both versions aim to modify the Pharmacy Benefit Prompt Pay Act and address long-standing complaints from pharmacies about PBM practices, the House and Senate approaches differ in important ways.

At its core, HB 1665 reflects a broader national debate over the role of Pharmacy Benefit Managers (PBMs) in the pharmaceutical marketplace. PBMs act as intermediaries between insurance companies, drug manufacturers, and pharmacies, negotiating prices and administering prescription drug benefits. Supporters argue that PBMs use their scale to secure lower drug prices, while critics contend that their reimbursement practices and opaque pricing structures place independent pharmacies at a disadvantage. But this debate often misses the larger point. The modern pharmaceutical market is already one of the most heavily regulated sectors of the American economy, shaped by layers of federal and state mandates, insurance regulations, and government distortions. Conservatives should be skeptical of proposals that attempt to correct market distortions with even more government intervention. History shows that when government tries to manage complex markets, it rarely solves the underlying problem and often creates new ones. Real reform should focus on removing the policies that distort the marketplace and restoring transparent competition, rather than expanding government control over how private actors negotiate prices and conduct business.

The two versions of HB 1665 approach these concerns with different regulatory structures.

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The Major Structural Difference: Who Regulates PBMs

The most significant change in the House-passed version of HB 1665 is a shift in regulatory authority. The bill moves oversight of PBMs away from the Mississippi Board of Pharmacy and places it under the Mississippi Commissioner of Insurance.

This change would centralize PBM regulation within the Department of Insurance and would also create a special fund in the state treasury to support enforcement and oversight.

The Senate substitute, by contrast, keeps more of the existing regulatory structure intact. While it still modifies several rules governing PBMs, it retains a larger role for the Board of Pharmacy and avoids the same level of structural reorganization.

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House Version vs. Senate Substitute: Key Differences

HOUSE VERSION (HB1665PS)

Major Structural Change

• Transfers oversight of Pharmacy Benefit Managers (PBMs) to the Mississippi Commissioner of Insurance

Regulatory Expansion

• Expands the authority of the Department of Insurance to regulate PBMs and related organizations

Pricing Mechanisms

• Eliminates Maximum Allowable Cost (MAC) lists, a pricing tool PBMs use to determine reimbursement rates

Pharmacy Reimbursement

• Revises reimbursement rules and administrative procedures governing PBM payments to pharmacies

Claim Denials

• Requires PBMs to provide written explanations for claim denials within seven days

Appeals Process

• Expands the administrative process pharmacies can use to challenge reimbursement decisions

Licensing Requirements

• Requires Pharmacy Services Administrative Organizations (PSAOs) to be licensed by the Insurance Commissioner

Regulatory Funding

• Creates a special fund in the state treasury to support enforcement and oversight

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SENATE SUBSTITUTE VERSION

Regulatory Structure

• Keeps more of the existing regulatory framework in place

Board of Pharmacy Role

• Maintains a larger role for the Mississippi Board of Pharmacy in the regulatory process

PBM Oversight

• Adjusts regulatory requirements but avoids a major shift in agency authority

Pricing Mechanisms

• Retains or modifies MAC pricing lists rather than eliminating them

Pharmacy Reimbursement

• Makes procedural changes but does not significantly restructure reimbursement rules

Claim Denials

• Maintains requirements for PBMs to provide explanations for denied claims, with modified language

Appeals Process

• Keeps an appeals process for pharmacies but with less expansion of administrative procedures

Licensing

• Maintains licensing requirements but with continued involvement of the Board of Pharmacy

Regulatory Funding

• Scales back or restructures the regulatory funding approach compared to the House version

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What the Bill Is Trying to Fix

HB 1665 is largely driven by complaints from independent pharmacies that PBMs use reimbursement formulas and pricing practices that make it difficult for small pharmacies to remain profitable.

Pharmacists often point to several specific concerns:

• reimbursement rates below the pharmacy’s acquisition cost

• delays or denials in payment

• opaque pricing formulas such as maximum allowable cost lists

• limited transparency in PBM reimbursement decisions

Supporters of the bill argue stronger oversight is needed to ensure fair treatment of pharmacies and improve transparency in the drug pricing system.

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The Policy Debate Behind the Bill

The differences between the House and Senate versions reflect a broader policy question: how much government regulation should exist in the PBM market.

Supporters of stronger regulation argue that PBMs have grown into powerful intermediaries operating with limited transparency. From this perspective, state oversight is necessary to protect independent pharmacies and ensure consumers are not harmed by opaque pricing practices.

But many conservatives view the issue differently. Heavy-handed regulation can distort private contracts between PBMs, insurers, and pharmacies, potentially undermining the very price negotiations that help control drug costs. When government dictates how private actors must structure reimbursements or pricing arrangements, it risks replacing market competition with political decision-making.

This debate is not unique to Mississippi. Legislatures across the country are considering similar PBM reform proposals, with states pursuing widely different approaches ranging from modest transparency requirements to strict government control over pricing and reimbursement formulas.

As is often the case, however, policymakers are tempted by the promise of a quick political fix. More regulation allows politicians to present themselves as the heroes solving a problem. The reality is far less simple. When government responds to market distortions by layering on additional mandates and controls, it rarely solves the underlying problem. More often, it creates new distortions, higher costs, and unintended consequences that lawmakers must later attempt to fix again.

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What Happens Next

The fate of HB 1665 will ultimately depend on whether lawmakers can reconcile the structural differences between the House and Senate versions. Several key policy questions will likely shape those negotiations:

• Which state agency should be responsible for regulating PBMs

• Whether pricing tools such as Maximum Allowable Cost (MAC) lists should remain available

• How extensive the state’s administrative oversight of PBMs should be

The answers to these questions will determine whether Mississippi adopts a more aggressive regulatory framework or settles on a narrower set of reforms.

But one reality of government policymaking rarely changes. When politicians position themselves as the winners of a new regulatory scheme, the public ends up bearing the cost—through higher prices, reduced competition, or fewer choices in the marketplace.