By Dennis M. Sponer, J.D., LL.M., MBA | May 2026
Three major developments in May warrant the attention of all workers’ compensation professionals overseeing pharmacy or PBM programs. Two have immediate operational impacts, while the third represents a gradual but significant national shift on the horizon.
Texas Targets Topical Analgesics — and the Rest of the Market Should Be Watching
The Texas Division of Workers’ Compensation (DWC) has finalized its 2026 Medical Quality Review Annual Audit Plan, and the subject is topical analgesics. The DWC will evaluate the medical necessity and appropriateness of topical analgesic prescriptions within the Texas workers’ compensation system— a move that follows stakeholder feedback, including from payers and their trade associations, that topical compounding and off-label topical prescribing have driven up costs without clear clinical justification.
The implications extend beyond Texas. Topical analgesics have long contributed to rising costs in workers’ compensation pharmacy. The DWC’s audit will likely generate data that regulators in other states may use to justify increased scrutiny. Findings from the audit could also prompt future changes to reimbursement rules, especially if systemic trends or compliance issues are identified. Programs with significant exposure in Texas should proactively review the utilization of topical analgesics before the DWC publishes its findings.
Separately, the DWC noted that it may also pursue a peer review audit of utilization review agent reports — to evaluate compliance with the Official Disability Guidelines and appropriate reviewer selection — if resources allow. Managed care organizations and UROs with Texas business should take note.
My colleague, Cliff Goldstein has been tracking this issue – especially in Pennsylvania.
Oklahoma Governor Vetoes Cost-Shifting PBM Bill — But the Fight Isn’t Over
On April 22, Oklahoma Governor Kevin Stitt vetoed Senate Bill 2074, which critics argued would have substantially increased pharmacy reimbursement obligations within the Oklahoma workers’ compensation system. The Oklahoma Health Care Authority estimated the bill would have cost the state’s employee group insurance program an additional $11.6 million in fiscal year 2027 alone.
Governor Stitt described the bill in his veto message as “a hidden tax” that would ultimately be passed on to employers, small businesses, and Oklahoma families via higher premiums. While the veto favors payers, it is not the final word. A legislative override remains possible before the session ends. Workers’ compensation carriers and TPAs with Oklahoma exposure should closely monitor the process.
This reflects a broader national trend. States with pharmacy-dispensing interests continue to pursue minimum reimbursement mandates, typically under the guise of protecting community pharmacies.
In the context of workers’ compensation, such mandates directly increase drug costs for payers. Oklahoma is not unique; similar bills in New York, Tennessee, and other states highlight the ongoing pressure. The veto offers temporary relief but does not resolve the underlying issue.
The FTC’s PBM Playbook Is Going Industrywide — A June Hearing Will Tell Us How Far
When we covered the FTC’s landmark settlement with Express Scripts in February, we noted that the FTC was still in litigation against CVS Caremark and OptumRx. In March, the FTC extended the stay in those proceedings after both companies disclosed they were making “significant progress” toward settlement. A key evidentiary hearing is now scheduled for June 2026. That hearing — or a settlement announced before it — will determine whether the Express Scripts consent order becomes an industry-wide template.
What’s at stake is significant. The Express Scripts settlement requires the company to stop preferring high-list-price drugs on its standard formularies, delink PBM compensation from drug list prices, base patient cost-sharing on net price rather than list price, and move to a cost-plus reimbursement model for independent community pharmacies. The FTC estimates this could reduce patient out-of-pocket costs by up to $7 billion over ten years on insulin alone. If comparable terms are imposed on Caremark and OptumRx — which together with Express Scripts fill roughly 80% of all U.S. prescriptions, including workers’ compensation — the financial architecture of PBM contracting will look fundamentally different.
Workers’ compensation payers who have not reviewed their PBM contracts for spread pricing, rebate retention, and affiliate fee structures should do so now, rather than waiting for the June hearing. For programs relying on Caremark or OptumRx, current settlement negotiations signal that these relationships will soon operate differently—likely within the next 12 to 18 months. The key question is not if contract changes are needed, but whether programs will anticipate and manage those changes proactively before they impact costs.
Other Highlights
These three developments don’t exhaust the May regulatory landscape. Kansas signed the Consumer Prescription Protection and Accountability Act into law on April 9, joining Massachusetts and a growing list of states that have enacted PBM-specific spread pricing bans, rebate pass-through mandates, and audit rights.
The reimbursement provisions have drawn opposition from PBMs, and litigation may follow — a pattern we have seen in Iowa, where a similar statute has been tied up in ERISA preemption challenges. California continues to update its fee schedules and Medical Treatment Utilization Schedule (MTUS) treatment guidelines, with changes effective for services rendered on or after April 1, 2026, now in effect. Operators in multiple states should verify that system updates have been applied.
Organizations that excel at managing these changes are those that monitor developments proactively—before they escalate into claims disputes, contract issues, or compliance problems. With the accelerating pace of regulatory change at both federal and state levels, reactive management is becoming increasingly costly.
Each month, we publish a comprehensive Regulatory Risk Intelligence Monitor covering all six WC pharmacy and PBM sectors: PBM licensing, pharmacy fee schedules, care directives, physician dispensing, Nurse Case Manager regulations, and TPA licensing. Subscribers receive clear guidance on client strategies, real-time tracking of bills across all 50 states, and immediate access to cost impact analysis.
Dennis M. Sponer, J.D., LL.M., and MBA, is the Principal of SRX Advisors, and serves in an Of Counsel capacity to Goldsand Friedberg, a healthcare regulatory law firm. His practice sits at the intersection of pharmacy law, PBM regulation, and workers’ compensation compliance.
