During the 2025 legislative session, Governor Gavin Newsom signed 794 bills into law and vetoed 123 bills.¹ New healthcare-related laws, effective January 1, 2026, focus on increased regulatory oversight of healthcare transactions, limits on corporate influence, prescription drug cost controls, and guardrails on the use of artificial intelligence (AI) in clinical settings.
Increased Oversight of Healthcare Transactions
Assembly Bill 1415 — Expanded Authority of the Office of Health Care Affordability
Author: Assemblymember Mia Bonta (D–Oakland)
AB 1415 significantly expands the authority of the Office of Health Care Affordability (OHCA) to review healthcare transactions involving physician groups, hospitals, management services organizations (MSOs), and private equity investors.
The law broadens reporting and advance notice requirements for material transactions, including practice acquisitions, consolidations, and certain contracting arrangements. OHCA is empowered to analyze the impact of these transactions on healthcare costs, access, and quality.
Practices considering mergers, acquisitions, or MSO arrangements may face additional disclosure and review requirements and transactions may be delayed or subject to increased scrutiny, particularly those involving investor-backed entities.
Senate Bill 351 — Strengthening Corporate Practice of Medicine Protections
Author: Senator Christopher Cabaldon (D–Napa)
SB 351 codifies and enhances California’s corporate practice of medicine restrictions for the first time with clear statutory language, explicitly limiting the control that private equity firms and other non-clinical entities may exercise over medical and dental practices.
The law prohibits non-physician owners or investors from interfering in clinical decision-making, billing, staffing, compensation models tied to clinical judgment, or professional autonomy. It also voids contract provisions that restrict physicians from reporting quality-of-care concerns or competing after leaving a practice.
Enforcement authority will lie with the California Attorney General. Existing MSO and private equity-backed contracts may need to be reviewed and amended with the purpose of having physicians gain clearer statutory protections for clinical independence.
Prescription Drug Cost Regulations
Senate Bill 40 — Insulin Cost-Sharing Limits
Author: Senator Scott Wiener (D–San Francisco)
SB 40 places a cap on insulin cost-sharing for large group health plans, limiting copayments, deductibles, and coinsurance to no more than $35 for a 30-day supply starting January 1, 2026 (with a similar cap for small and individual plans beginning in 2027). It also restricts step therapy requirements and ensures that at least one form of each type of insulin is on the formulary.
Senate Bill 41 — Pharmacy Benefit Manager (PBM) Oversight
Author: Senator Scott Wiener (D–San Francisco)
SB 41 imposes new regulatory standards on pharmacy benefit managers, addressing pricing practices, conflicts of interest, and transparency. While implementation details vary, the law is intended to reduce drug price inflation and improve reimbursement clarity. Potential downstream effects can provide for improved transparency and prepare for changes in drug pricing and patient affordability with changes in patient out-of-pocket costs over time.
Artificial Intelligence and Clinical Communications
Assembly Bill 489 — Restrictions on AI Representing Clinical Authority
Author: Assemblymember Mia Bonta (D–Oakland)
AB 489 prohibits AI systems from presenting themselves as licensed healthcare professionals by using terms, titles, or phrasing that imply care or advice is being given by a licensed health professional when it is not. Any AI-generated health information must clearly disclose that it is not produced by a physician or other licensed clinician. Practices using AI tools (chatbots, triage systems, patient messaging platforms) must ensure proper disclosures to reduce risk of patient confusion or reliance on non-clinical advice.
Gabriela Villanueva is CAP’s Government and External Affairs Analyst. Questions or comments related to this article should be directed to GVillanueva@CAPphysicians.com.
¹Bollag, Sophia. "Here are 15 new laws that Californians must start following in 2026." San Francisco Chronicle. December 1, 2025. https://www.sfchronicle.com/politics/article/new-california-laws-2026-2….