HF2851

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