Dear Neighbors,
Nearly everyone needs, has used, or will use pharmaceutical drugs at some point in their life. Given this, the price of pharmaceutical drugs is something that impacts hundreds of millions of Americans every day.
As a lawmaker, I have spent a great deal of time and energy looking for ways to reduce the cost of life-saving drugs.
Many of you know someone or have been personally impacted by the high-costs of prescription drugs. For example, new drugs entering the market to treat multiple sclerosis can cost thousands of dollars per month. These sorts of prices can financially devastate a family.
A key component of the drug industry, Pharmacy Benefit Managers (PBM) administer prescription drug plans for health insurers. While PBMs do not set drug prices, they play a role in reducing costs by acting like networks for drugs and representing consumers across health plan sponsors.
Over the years, PBMs have increasingly frustrated consumers and lawmakers with a wide array of practices that many consider having been contributing factors to the high costs of pharmaceuticals.
There are a number of concerns that have been raised about PBMs, including the belief that the savings they create are oftentimes not actually passed along to consumers. Other concerns have included:
- Spread Pricing – increasing the difference between the amount a PBM reimburses pharmacists for a drug and the amount they charge insurers and keeping the price difference for themselves rather than passing the savings through and lowering the costs for the drugs to the patients.
- Rebate Pumping – substituting low-cost drugs for newer, high-cost drugs that pay larger rebates and enrich the PBM’s at the expense of increased costs for the patients.
- Hiding/Withholding Rebates that should be passed through to local pharmacies and patients. These rebates should be passed through the end payer (employer, health plan, state of MN). The rebates were initially designed to be passed back to the end payer to lower the overall drug cost of the plan, lower premiums and out of pocket expenses to the patient.
- Restricting Patient Choice through drug formularies which usually increase drug costs and with no benefit to the patients.
- Over-promoting or requiring mail order services by patients that are in most cases owned by the PBMs to the exclusion of local drug stores.
- Formulary steering – influencing doctors to change prescriptions to maximize PBM profits.
These sorts of tactics oftentimes artificially inflate the cost of prescription medications and can hurt rural pharmacies—sometimes leading to closures and less access for folks in Greater Minnesota.
These practices also are a major inflation driver in healthcare costs and result in increased health insurance premiums for insureds.
In an effort to address some of the concerns we have with PBMs, the legislature overwhelmingly approved legislation this session to ensure that PBMs are not artificially inflating the price of prescriptions.
The legislation passed the Senate 67-0 and the House 130-2 and was subsequently signed into law by Governor Walz.
Components of the bill that may be of interest include:
- Preventing a PBM from requiring pharmacies to dispense more expensive, therapeutically equivalent drugs. This will ensure patients can access the cheapest possible drug, often generics.
- Requiring PBMs to disclose to enrollees the out-of-pocket costs at specialty pharmacies vs in-network retail pharmacies and the out-of-pocket costs at preferred network pharmacies vs non-preferred pharmacies.
- Allowing prescription synchronization – a process where patients can have their medications filled on the same schedule – which increases medication adherence
- Prohibiting pharmacy gag clauses which prevent pharmacists from informing patients of alternative drugs which could be cheaper or forms of payment which could save patient money (paying the cash price, a copay, or some other cost of a drug). Some PBMs have already ended this practice.
- Requiring pharmacies to charge a patient the lowest allowable cost for a drug.
- Allowing pharmacists to provide a patient with an interchangeable and therapeutically equivalent drug in certain instances.
By and large, these are good ideas to help lower the costs of care and to improve practices for PBMs and pharmacists. I will continue to fight to lower healthcare costs and improve access by promoting legislation to improve patient transparency in healthcare.
Staying in Touch
It is an honor to serve you and your family in St. Paul.
As always, please do not hesitate to contact me to share your thoughts, questions, and concerns. I can be reached by phone at 651-296-4229 or via email at rep.glenn.gruenhagen@house.mn
Have a great weekend,
Glenn