This Minnesota Senate bill (S.F. No. 1877) aims to regulate how pharmacy benefit managers (PBMs) and health carriers handle prescription drug rebates and other financial compensation from drug manufacturers.

Key Provisions:

1. Use of Compensation to Benefit Covered Persons:

   • PBMs and health carriers must pass all compensation received from drug manufacturers directly to the covered person at the point of sale to reduce their out-of-pocket costs.
   • An exception is allowed if a patient’s cost-sharing obligation (copayment or coinsurance) is already lower than it would be after applying the compensation. In this case, the retained funds must be used to offset future premiums or other costs for covered persons.

2. State Employee Insurance Compliance:

   • Contracts between PBMs and the State Employee Group Insurance Program must include provisions ensuring compliance with this bill.

3. Definitions:

   • "Compensation" includes all types of financial benefits from drug manufacturers, such as rebates, discounts, fees, chargebacks, and other payments.
   • "Cost-sharing obligation" refers to a covered person’s required copayment or coinsurance for a prescription drug.

4. Annual Compliance Report:

   • Beginning March 1, 2026, and annually thereafter, PBMs and health carriers must file reports with the commissioner detailing their compliance with these requirements.

Purpose:

The bill is designed to ensure that financial benefits received from drug manufacturers are used to lower costs for patients rather than being retained by PBMs or insurers.