Purpose of the Bill

The primary goal of this bill is to regulate the practices of Pharmacy Benefit Managers (PBMs) in Minnesota, aiming to increase transparency, ensure fair pricing practices, and maintain ethical business procedures. It seeks to modify specific procurement requirements, prohibit spread pricing, and impose fiduciary duties on PBMs.

Main Provisions

• Spread Pricing Prohibition: PBMs are forbidden from charging a health plan more for prescription drugs than what they pay the pharmacy, eliminating spread pricing practices.
• Licensing and Fees: The bill outlines requirements for PBMs to obtain and renew licenses, including an increased application fee of at least $15,000. Additionally, penalties for operating without a license start at $10,000 per day.
• Fiduciary Duty and Ethical Practices: PBMs must act in good faith, disclose conflicts of interest, and adhere to fiduciary duties towards health carriers. They must also perform duties with due diligence and not impose unfair pharmacy accreditation standards.
• Transparency and Reporting: Requires PBMs to submit annual reports detailing rebates, fees, and prices for drugs, which must be shared with the commissioner while protecting trade secrets.
• Reimbursement and Pricing Practices: PBMs cannot reimburse pharmacies less than they would reimburse their affiliates for the same drugs. Payment reductions to pharmacies must be fair and transparent.
• Pharmacy Network Service Requirements: Establishes criteria for PBMs to create pharmacy network service areas for review and approval.
• Appropriation: Allocates funds to increase staffing at the commissioner of commerce's office for monitoring and enforcing the regulations imposed on PBMs.

Significant Changes to Existing Law

• Updated Licensing Structure: New fee structures and penalties for PBMs that operate without a license or outside of compliance with state laws.
• Enhanced Regulatory Requirements: Introduces stricter conditions under which PBMs must operate, including transparency in pricing and fulfillment of fiduciary duties.
• Prohibition of Certain Practices: Explicit prohibition of spread pricing and conditions under which pharmacies can dispute payment or pricing decisions by PBMs.
• Increased Penalties for Non-Compliance: Strengthened penalties for violations to deter unlawful practices by PBMs.

Relevant Terms

pharmacy benefit manager, spread pricing, fiduciary duty, license application fee, transparency report, maximum allowable cost pricing, network service area, reimbursement practices, prescription drug pricing, conflict of interest, rebate disclosures.