Last week, amid preliminary budget negotiations with the Senate, the House took bold action to reduce soaring prescription drug costs. The legislation would regulate Pharmacy Benefit Managers (PBMs), who act as “middle men” between drug manufacturers and pharmacies.
Working on behalf of health insurance plans, PBMs negotiate discounts and rebates on prescription drug purchases with drug manufacturers, keeping a share of the savings for themselves. In exchange for the discounts and rebates, PBMs use the “formularies” (lists of covered drugs) that they create for the health plan to steer the health plan’s members into using the drugs offering the biggest rebates. The greater the volume that the PBM steers towards a manufacturer, the bigger the rebate. However, for many patients, the drug with the biggest rebate may not be the most effective drug. If the PBM negotiates a bigger rebate with a different manufacturer, then a drug that’s been working for you might be dropped from the formulary, midyear.
Under current law, all transactions with PBMs are considered “trade secrets,” making it hard to understand what’s happening behind the scenes. For example, PBMs can prohibit your local pharmacist from revealing that the standard retail price for a drug is less than the price you pay out of pocket under your insurance plan’s formulary. The bill would pull back the curtain and prohibit these kinds of “gag rules” on pharmacists.
More importantly, PBMs would be obligated to notify their client health insurers whenever a deal offered by a manufacturer presents a conflict of interest, and to look out for the financial interests of their customers by only seeking out deals that provide the lowest price to the customer (as opposed to the biggest rebate for the PBM). PBMs would also be required to make annual reports to the Minnesota Department of Commerce, and to present cost and payment information when requested.
A House/Senate conference committee convened to sort out minor differences with the Republican Senate’s companion legislation and I’m pleased to report they have come to a compromise. You can read more about it here.
With less than a week remaining in the 2019 session, the focus has now shifted to negotiations with the Senate and Governor on the state budget. Progress is slow, but I’m optimistic we can find a compromise on the investments Minnesotans need and rely on.
Here are a few key differences between the DFL House and GOP Senate:
Yesterday, Senate Republicans said extending the provider tax was no longer on the table in budget negotiations. Taking away this health care funding will jeopardize health care for over one million Minnesotans who receive health care through the Healthcare Access Fund, including low income workers and many seniors in nursing homes. It would also impact over 40,000 Minnesotans with disabilities who rely on Personal Care Attendant (PCA) services. The Star Tribune goes into greater depth about this. Although this article is written primarily from the perspective of an employment agency that places PCAs with patients with disabilities, it highlights the complexity of the issue. The vast majority of the patients are on Medical Assistance, which is funded from the provider tax.
This week, the House passed legislation that would regulate Assisted Living Facilities. As discussed in a Star Tribune story this morning, Minnesota is currently the only state that does not regulate these facilities and a Star Tribune series described the horrific abuses that seniors have been subjected to in the worst of these facilities. The Senate has not acted on this issue this session, but we are working hard to include our safeguards in the overall Health and Human Services bill that we are currently negotiating with them. Again, many elderly residents rely on Medical Assistance to help pay for their stays in these facilities and that funding is threatened by the Senate’s refusal to extend the Provider Tax.
Our House Health and Human Services Budget maintains this stream of funding.
In my last update, I provided some background on the substantial investments the House is making in E-12 education. A cornerstone of our budget would increase per-pupil funding by 3% in 2020 and another 2% in 2021. If our schools and students aren’t getting the resources they are relying on, this will inevitably lead to devastating programming cuts, teacher and aide layoffs, larger class sizes and property tax levy increases. Here’s a breakdown of what the House and Senate funding differences look like for Bloomington area schools:
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