Walz Signs Bill Regulating Pharmacy Benefit Managers
ST. PAUL, MN – Governor Walz held a ceremonial signing today for Representative Alice Mann’s bill to lower the cost of prescription drugs by regulating and requiring transparency from Pharmacy Benefit Managers (PBMs), which serve as pharmaceutical middle men.
“The pharmacy benefit manager bill brings transparency to prescription drug prices, which have skyrocketed in recent years,” said Rep. Alice Mann (DFL-Lakeville). “Pharmacy benefit managers are a powerful player in our health care system and we’re going to shine a light to see how these prices come about and try to bend the cost curve.”
PBMs are a middle man between drug manufacturers and pharmacies, developing and maintaining lists of covered drugs (formularies) that they offer to pharmacies. Drug manufacturers give PBMs rebates – or kickbacks – to encourage the PBM to place their product on the formulary, with no guarantee that the rebate will be passed on to consumers. Higher rebates incentivize PBMs to remove less expensive drugs from formularies, and encourage companies to raise list prices. All of this raises the price of prescription drugs.
Rep. Mann's comprehensive bill would require PBMs to be licensed by the Department of Commerce, which would have the ability to suspend, revoke, or place a PBM on probation. Under the bill, PBMs would be obligated to notify health carriers whenever an activity presents a conflict of interest, and to look out for the financial interests of their customers by seeking out deals that provide the lowest price. PBMs would also be required to make annual reports to Commerce, and to present cost and payment information when requested.
Stats and Figures:
- As of 2016, the three largest PBMs (Express Scripts, CVS Health, and OptumRx) accounted for 78% of the market
- West Virginia removed PBMs from their Medical Assistance program and saved $38 million dollars.
- Prescription drug spending went up seven percent each year between 2012 and 2016.
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