Minnesota House passes bill regulating pharmaceutical middle men
ST. PAUL, MN – The Minnesota House today approved Representative Alice Mann’s bill (H.F. 728) to lower the cost of prescription drugs by regulating, requiring transparency from, and creating fiduciary responsibilities for Pharmacy Benefit Managers (PBMs), which serve as pharmaceutical middle men.
“We can’t let a key player in an industry that represents nearly a fifth of our economy operate in obscurity,” said Rep. Alice Mann (DFL-Lakeville). “We have a responsibility to increase transparency and accountability in health care to make sure that Minnesotans can afford the medications they need to survive.”
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.
Under current law, all transactions with PBMs are trade secrets. The freedom to do what they want, without oversight, allows PBMs to switch drugs whenever they can get a higher rebate – sometimes several times a year – which means doctors have to change patients’ prescriptions to medications that are more expensive, and often less effective.
Rep. Mann's comprehensive bill would require PBMs to be licensed by the Dept. 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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