State Laws and Regulations

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The California Senate has approved SB 41, a bill now under consideration in the Assembly, that would impose new licensing, transparency, and pricing regulations on pharmacy benefit managers (PBMs). Proponents argue the legislation would curb anti-competitive practices, enhance transparency, and ensure fairer pricing in the administration of prescription drug benefits by health insurers and health care service plans. Opponents of the legislation argue that, among other things, the bill would result in significant premium increases and that banning so-called performance-based contracts would not lower costs to patients.Continue Reading California Senate Passes Bill Regulating Pharmacy Benefit Managers

California lawmakers are once again considering legislation targeting private equity’s influence in health care. Senate Bill 351 (SB 351), introduced on February 12, 2025, seeks to limit the influence of management service organizations (MSOs) and dental service organizations (DSOs) backed by private equity (PE) groups and hedge funds over medical and dental practices.

SB 351 adopts certain provisions of last year’s vetoed Assembly Bill 3129 (AB 3129), which would have required PE groups and hedge funds to obtain California Attorney General (AG) approval before entering into certain health care transactions. In September 2024, Governor Gavin Newsom vetoed that bill, citing redundancy with the California Office of Health Care Affordability’s (OHCA) existing oversight of health care transactions. Our discussion of OHCA’s health care transaction notice requirements is available in an earlier Reed Smith in-depth piece.Continue Reading California to Reconsider Restrictions on Private Equity Influence in Medicine and Dentistry

The California Attorney General’s Office (AG) unsurprisingly takes an expansive view of how the development, sale, and use of artificial intelligence technology (AI) in healthcare could lead to potential violations of existing California laws. In a recent legal advisory the AG highlights specific areas healthcare organizations should focus on as they develop, train, improve, and deploy AI in connection with patients, plan members, and their data.

In particular, the advisory identifies AI risk hot spots that may trigger certain state consumer protection, anti-discrimination, and privacy/autonomy laws, as described further below.Continue Reading California AG Explains How Laws May Apply to AI in Healthcare