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HF2851 (Legislative Session 94 (2025-2026))

Reverse auction procurement requirement for SEGIP pharmacy benefit contracts modified, use of spread pricing by pharmacy benefit managers prohibited, license application fees increased, fiduciary duties imposed, and money appropriated.

Related bill: SF3063

AI Generated Summary

Purpose of the Bill

The bill aims to reform the way pharmacy benefit managers (PBMs) operate in the state of Minnesota, focusing on increasing transparency, accountability, and fairness in prescription drug pricing.

Main Provisions

  • Spread Pricing Prohibition: The bill bans spread pricing, a practice where PBMs charge health plans a higher price for a drug than what they reimburse to the pharmacies.
  • Licensing Fees: Increases the fees PBMs must pay to obtain and renew their licenses, ensuring these funds contribute to the state’s general fund.
  • Fiduciary Duty: Establishes that PBMs have a fiduciary duty to act in the best interest of their health carrier clients, ensuring good faith in their business practices.
  • Transparency Reports: PBMs are required to submit annual transparency reports detailing drug pricing data and rebates to the state commissioner.
  • Reimbursement Practices: The bill mandates that PBMs cannot reimburse pharmacies less than the cost they charge health plans and limits reductions in reimbursement payments.
  • Contractual Fairness: Ensures that PBMs cannot charge pharmacies additional fees related to claims processing and must use transparent, fair reimbursement models.
  • Network Service Areas: Specifies requirements for PBMs to establish adequate pharmacy network service areas.
  • Appeals Process for Pricing: Requires PBMs to provide a defined process for pharmacies to appeal and resolve disputes over maximum allowable cost pricing.

Significant Changes to Existing Law

  • The bill prohibits PBMs from using spread pricing, significantly altering how they bill health plans versus what they pay pharmacies.
  • Introduces a fiduciary duty for PBMs, which is a significant shift from current practices, requiring them to prioritize the interests of health carriers.
  • Adjusts the financial and procedural obligations for PBMs, particularly through increased licensing fees and mandated transparency reports.

Relevant Terms

  • Spread Pricing
  • Pharmacy Benefit Managers (PBMs)
  • Licensing Fees
  • Fiduciary Duty
  • Transparency Reports
  • Reimbursement Practices
  • Pharmacy Network
  • Maximum Allowable Cost Pricing

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
March 25, 2025HouseFloorActionIntroduction and first reading, referred toHealth Finance and Policy

Citations

 
[
  {
    "analysis": {
      "added": [
        "Clarification on licensing application requirements."
      ],
      "removed": [
        ""
      ],
      "summary": "Amendment to the application process for pharmacy benefit manager licenses under section 62W.03, subdivision 2.",
      "modified": [
        "Adjustment of application fee structure."
      ]
    },
    "citation": "62W.03",
    "subdivision": "subdivision 2"
  },
  {
    "analysis": {
      "added": [
        "Clarification on renewal application requirements."
      ],
      "removed": [
        ""
      ],
      "summary": "Amendment to the renewal process for pharmacy benefit manager licenses under section 62W.03, subdivision 3.",
      "modified": [
        "Adjustment of renewal fee structure and deadlines."
      ]
    },
    "citation": "62W.03",
    "subdivision": "subdivision 3"
  },
  {
    "analysis": {
      "added": [
        "Specification of new penalty amounts."
      ],
      "removed": [
        ""
      ],
      "summary": "Penalty modifications for unlicensed pharmacy benefit managers under section 62W.03, subdivision 5.",
      "modified": [
        "Adjustment of fine details per violation."
      ]
    },
    "citation": "62W.03",
    "subdivision": "subdivision 5"
  },
  {
    "analysis": {
      "added": [
        "New requirements for fiduciary duty."
      ],
      "removed": [
        ""
      ],
      "summary": "Modification of general business practices for pharmacy benefit managers under section 62W.04.",
      "modified": [
        "Clarification on conflict of interest notifications."
      ]
    },
    "citation": "62W.04",
    "subdivision": ""
  },
  {
    "analysis": {
      "added": [
        "New subdivision stating requirements for service areas."
      ],
      "removed": [
        ""
      ],
      "summary": "Adjustment to network service area requirements under section 62W.05.",
      "modified": [
        "Adjustments to how network areas are reviewed."
      ]
    },
    "citation": "62W.05",
    "subdivision": ""
  },
  {
    "analysis": {
      "added": [
        "Additional data elements to transparency report."
      ],
      "removed": [
        ""
      ],
      "summary": "Amendment to transparency reporting requirements under section 62W.06, subdivision 2.",
      "modified": [
        "Clarification on how data should be submitted and classified."
      ]
    },
    "citation": "62W.06",
    "subdivision": "subdivision 2"
  },
  {
    "analysis": {
      "added": [
        "New criteria for putting drugs on maximum allowable cost pricing lists."
      ],
      "removed": [
        ""
      ],
      "summary": "Modifications to maximum allowable cost pricing under section 62W.08.",
      "modified": [
        "Fine-tuning of appeals process regarding cost pricing."
      ]
    },
    "citation": "62W.08",
    "subdivision": ""
  },
  {
    "analysis": {
      "added": [
        "Clarified the conditions under which claims adjustments are permitted."
      ],
      "removed": [
        ""
      ],
      "summary": "Prohibition of retroactive claim adjustments under section 62W.13.",
      "modified": [
        "Adjustment to language regarding claims audit process."
      ]
    },
    "citation": "62W.13",
    "subdivision": ""
  }
]

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