Purpose of the Bill

This bill aims to reform and regulate pharmacy benefit managers (PBMs) in Minnesota, focusing on their pricing practices and contractual relationships with pharmacies and health carriers. It seeks to enhance transparency, accuracy, and fairness in the pharmaceutical industry, while also adjusting licensing regulations for PBMs and increasing oversight by state authorities.

Main Provisions

• Prohibition of Spread Pricing: The bill bans spread pricing, which occurs when PBMs charge a health plan a different price for prescription drugs than what they pay to pharmacies.

• Licensing and Fees: It raises the application and renewal fees for PBM licenses and requires PBMs to meet specific criteria to obtain or renew these licenses. Non-compliance could result in penalties or denial of the license renewal.

• Fiduciary Duties: PBMs are mandated to execute their roles with good faith, skill, and diligence, notifying health carriers of conflicts of interest that may arise.

• Reimbursement Practices: Ensures that reimbursements to pharmacies are not lower than those provided to PBM affiliates, and establishes fair standards for drug pricing.

• Transparency Requirements: PBMs must submit annual transparency reports to the state, detailing costs, rebates, and fees, which will be published (with certain confidentiality protections).

• Network Requirements: Establishes that PBMs must create pharmacy networks consistent with state standards to ensure comprehensive service availability.

• Retroactive Adjustments: Limits the circumstances under which PBMs can adjust or deny prescription claims retroactively.

Significant Changes

• Increased Oversight: The bill appropriates funds to the Minnesota Department of Commerce to increase staff dedicated to overseeing and enforcing the regulations pertaining to PBMs.

• Penalties: Establishes fines for PBMs operating without a license, as well as for other violations of the chapter's provisions.

• Contractual Fairness: Invalidates contract clauses that limit PBMs' obligation for good faith dealings and prohibits them from using certain fees related to pharmacy claims processing.

Relevant Terms

spread pricing, pharmacy benefit manager, transparency report, licensing fees, fiduciary duty, reimbursement practices, conflict of interest, retroactive adjustments, maximum allowable cost pricing, appropriation, Department of Commerce.