Health and Safety Code section 1385.0018
(a)
The director may, after appropriate notice and opportunity for a hearing, by order suspend or revoke a license issued under this article to a pharmacy benefit manager or assess administrative penalties if the director determines that the licensee has committed an act or omission constituting grounds for disciplinary action.(b)
All of the following acts or omissions constitute grounds for disciplinary action by the director:(1)
The pharmacy benefit manager is operating at variance with basic organizational documents as filed pursuant to Section 1385.009, or with its published plan, or in a manner contrary to that described in, and reasonably inferred from, the plan as contained in its application for licensure and annual report, or any modification thereof, unless amendments allowing the variation have been submitted to, and approved by, the director.(2)
The continued operation of the pharmacy benefit manager shall constitute a substantial risk to its subscribers and enrollees.(3)
The pharmacy benefit manager has violated, attempted to violate, or conspired to violate, directly or indirectly, or assisted in or abetted a violation or conspiracy to violate a provision of this chapter, a rule or regulation adopted by the director pursuant to this chapter, or an order issued by the director pursuant to this chapter.(4)
The pharmacy benefit manager has engaged in conduct that constitutes fraud, dishonest dealing, or unfair competition, as defined by Section 17200 of the Business and Professions Code.(5)
The pharmacy benefit manager has permitted, aided, or abetted a violation by an employee or contractor who is a holder of a certificate, license, permit, registration, or exemption issued pursuant to the Business and Professions Code or this code that would constitute grounds for discipline against the certificate, license, permit, registration, or exemption.(6)
The pharmacy benefit manager has permitted, aided, or abetted the commission of an illegal act.(7)
The pharmacy benefit manager, its management company, another affiliate of the pharmacy benefit manager, or a controlling person, officer, director, or other person occupying a principal management or supervisory position in the pharmacy benefit manager, management company, or affiliate, has been convicted of or pleaded nolo contendere to a crime, or committed an act involving dishonesty, fraud, or deceit, which crime or act is substantially related to the qualifications, functions, or duties of a person engaged in business in accordance with this chapter. The director may revoke or deny a license hereunder irrespective of a subsequent order under Section 1203.4 of the Penal Code.(8)
The pharmacy benefit manager has been subject to a final disciplinary action taken by this state, another state, an agency of the federal government, or another country for an act or omission that would constitute a violation of this chapter.(9)
The pharmacy benefit manager violated the Confidentiality of Medical Information Act (Part 2.6 (commencing with Section 56) of Division 1 of the Civil Code).(10)
The pharmacy benefit manager violated Chapter 8.5 (commencing with Section 127671) of Part 2 of Division 107, including the data submission requirements of that chapter.(c)
The assessment of administrative penalties against a pharmacy benefit manager shall use the same factors described in subdivision (d) of Section 1386 for health care service plans.(d)
A pharmacy benefit manager shall be subject, if applicable, to all enforcement authority of the department set forth in Article 8 (commencing with Section 1390), and civil penalties for violation of the licensure requirement of Section 1385.009.(e)
Fines and administrative penalties collected pursuant to this section shall be deposited into the Pharmacy Benefit Manager Administrative Fines and Penalties Fund established pursuant to Section 1385.0024. These fines and administrative penalties shall not be used to reduce the assessments imposed on pharmacy benefit managers pursuant to Section 1385.0016.
Source:
Section 1385.0018, https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=HSC§ionNum=1385.0018. (updated Jun. 30, 2025; accessed Jul. 14, 2025).
