Increased oversight of pharmacy benefit managers aimed at improved transparency, lowered costs

Pharmacy benefit managers – commonly known as PBMs – administer prescription drug benefits for health carriers and employers, determining what will be covered, negotiating contracts with manufacturers and wholesalers, managing networks, and reimbursing pharmacies.

They could also be required to obtain licensure to operate in the Minnesota under HF728/SF278*, sponsored by Rep. Alice Mann (DFL-Lakeville) and Sen. Scott Jensen (R-Chaska).

The House Health and Human Services Finance Committee amended the “Minnesota Pharmacy Benefit Manager Licensure and Regulation Act” to reflect House language Wednesday, approved it, and referred the bill to the House Ways and Means Committee. The Senate passed its version 67-0 April 4.

Rep. Alice Mann

PBM licensure would require reports on network adequacy and give the Department of Commerce oversight in the event of noncompliance, fraud, or consumer complaints. The bill would allow for the suspension, revocation, and probation of licenses as well as the imposition of fines and penalties.

Differences between the bills include a House provision that would give pharmacy benefit managers a fiduciary responsibility to health carriers, requiring they act in the best interest of its patients, Mann said.

Rep. Glenn Gruenhagen (R-Glencoe) said he was concerned this requirement could lead to increased drug prices, a cessation of PBM services in Minnesota, and potential legal action.

While he “fully supports” increased accountability, “I’m just not sure this particular provision will produce that kind of result,” he said.

Mann replied that the bill’s language is based on Nevada legislation that went to court and was decided in the state’s favor.

“Every time we talk about adding responsibility to an industry, we hear these threats … generally that just doesn’t pan out,” Mann said. “At this point, I’d rather have a bill that holds this industry accountable.”

The bill contains other “strong” language, largely focused on transparency and designed to lower the cost of drugs, Mann said.

Provisions from HF728/SF278* are also included in the omnibus health and human services finance bill, said Rep. Tina Liebling (DFL-Rochester), the committee chair.