Purpose of the Bill

The purpose of this bill is to reform the practices of pharmacy benefit managers (PBMs) in Minnesota by modifying certain procurement and financial practices, increasing licensing fees, and imposing fiduciary duties to enhance transparency and fairness in the administration of pharmacy benefits.

Main Provisions

• Reverse Auction Modifications: Adjusts requirements for reverse auction procurement in the State Employee Group Insurance Program (SEGIP) pharmacy benefit contracts.
• Spread Pricing Ban: Prohibits pharmacy benefit managers from engaging in spread pricing, where the amount charged to health plans for prescription drugs differs from what is paid to pharmacies.
• Increased Licensing Fees: Raises the fees associated with applying for a license to operate as a pharmacy benefit manager in Minnesota.
• Fiduciary Duties: Imposes a fiduciary duty on PBMs, requiring them to act in the best interest of health carriers and perform duties with care, skill, prudence, and diligence.
• Reimbursement Practices: Ensures PBMs do not reimburse pharmacies less than they reimburse their affiliates and require them to justify the use of specific pricing.
• Transparency and Reporting: Mandates annual transparency reporting by PBMs, detailing costs, fees, and rebates.

Significant Changes to Existing Law

• Licensing Requirements: Increases application and renewal fees for PBM licenses.
• Penalties: Updates penalty structures to impose fines for unlicensed activity or violations of the provisions.
• Retroactive Adjustments: Limits the ability of PBMs to retroactively deny or adjust claim reimbursements.
• Network Requirements: Specifies network service area requirements for pharmacy networks managed by PBMs.
• Appeals Process: Establishes a structured process for pharmacies to appeal maximum allowable cost pricing discrepancies.

Relevant Terms

• Reverse Auction
• Spread Pricing
• Pharmacy Benefit Manager (PBM)
• Fiduciary Duty
• Maximum Allowable Cost Pricing
• Transparency Report
• Reimbursement Practices
• Licensing Fees
• Penalties