Drug Middlemen Face First-ever Regulations in Minnesota

From Bloomberg News, March 20: Middlemen negotiating drug prices for health insurers would be regulated in Minnesota for the first time under a bill headed to a second Senate committee in early April.

The Minnesota Commerce and Consumer Protection Finance and Policy Committee March 20 approved by voice vote SF 278, which would establish licensing fees and other standards for pharmacy benefit managers, who negotiate drug prices between manufacturers and insurers. It now heads to the Senate Finance Committee, where it could get scrutiny as early as the week beginning April 1, a Senate spokeswoman said.

If signed into law, Minnesota would become the eighth state to require pharmacy benefit managers to be licensed, according to the nonpartisan National Academy for State Health Policy.

The Minnesota House Ways and Means Committee is considering a related but slightly different bill, HF 728, after it was approved March 13 by the House Government Operations Committee.

Beginning Jan. 1, 2020, the Senate bill would charge all pharmacy benefit managers a $8,500 license fee, which may be renewed annually for $500. It would also impose new rules on benefit managers operating in the state. The Commerce Department, which would issue licenses, would be able to revoke them for violations such as fraud.

The bill also includes transparency language to ensure all pharmacies might compete on a more level playing field, bill author and state Sen. Scott Jensen (R), a physician, said during the March 20 hearing.

One provision in the Senate bill would prohibit effective gag orders on certain pharmacists. The gag orders forbid the pharmacists by contract from advising patients on prescription prices.

Lifting Gags

Jessica Astrup Ehret, who helps operate a Minnesota family pharmacy, told the committee a gag order imposed on her pharmacy prevented her from telling a customer with a $75 copay who was filling a prescription for a drug that costs $13 to simply pay the $13 out of pocket. The customer paid $75 for the drug, she said.

Pharmacy benefit managers want to strike a balance between protecting community pharmacies and the ability of health plans to maximize health-care spending on patients, David Root, a government affairs specialist with Prime Therapeutics LLC, told the committee.

The bill’s section on transparency, which requires disclosure of aggregate information on rebates other data, is an area for concern, he said.

“There are still a few sections we need to work through,” Root said.