SF4978

Purpose

• The bill creates and regulates a Formulary Committee to guide which drugs are covered for medical assistance and how decisions about prior authorization and drug lists are made.
• It strengthens public input, conflict-of-interest rules, and collaboration with the Minnesota Rare Disease Advisory Council to ensure expert advice, especially on orphan drugs and rare diseases.
• It restricts how the Department of Human Services can work with pharmacy benefit managers to preserve the committee’s ability to seek outside expertise.

Key Provisions and What They Do

• Formulary Committee structure and membership

  • The committee must include at least five physicians (including a practicing psychiatrist, a rare-disease specialist, a pediatric specialist, and a disability-focused clinician) and at least three pharmacists (including one outside the Twin Cities metro area and one hospital pharmacist). It also includes two consumer representatives who must have ties to medical assistance, and one member designated by the Minnesota Rare Disease Advisory Council.
  • One additional nonvoting ex officio member is the DHS medical director. The committee is not allowed to have members who are employed by DHS or have a personal financial interest in a drug-related company, but staff from DHS will participate as nonvoting members.

• Conflicts of interest

  • Members must disclose potential conflicts and recuse themselves from related discussions or votes. A conflict of interest alone does not bar service if there is no personal financial interest.
  • Public disclosure of conflicts must be posted on DHS’s site at least 48 hours before meetings addressing the drug on the agenda.

• Terms, meeting rules, and transparency

  • Members serve three-year terms and can be reappointed up to two times.
  • The committee must elect a chair and vice-chair, meet at least three times per year, and follow the Open Meeting Law. Members receive a $100 honorarium per meeting plus mileage.

• Public input and expert involvement

  • The committee can seek expertise from the Minnesota Rare Disease Advisory Council and from health care professionals outside the committee as needed, including submitting public comments.
  • The committee’s staff may communicate with the Rare Disease Advisory Council and its staff as long as a quorum isn’t present. Experts may submit public comments.

• Interaction with the Rare Disease Advisory Council (RDAC)

  • The RDAC must be consulted before the Formulary Committee takes action on prior authorization rules and on placing an orphan drug on the department’s preferred drug list (PDL).
  • The commissioner must engage RDAC promptly after FDA approval of an orphan drug (within 30 days) to obtain subject-matter expertise and to share relevant state work products with the RDAC. The RDAC may conduct public outreach about proposed actions, without forming a quorum of the Formulary Committee.

• Conflict-with-Contract restrictions

  • The bill prohibits entering into or renewing a contract with a pharmacy benefit manager (PBM) in a way that would limit the Formulary Committee’s ability to seek expertise from the RDAC.

• Expiration and public access

  • The Formulary Committee expires on June 30, 2029 (and possibly 2030, per the text).
  • The committee is subject to the Open Meeting Law, and public notice requirements apply for meetings and for the drugs discussed.

Prior Authorization (PA) Rules and Procedures

• General PA duties

  • The Formulary Committee develops criteria for prior authorization of drugs, especially when generic equivalents exist. It can recommend PA requirements directly to the commissioner and may ask the committee to review drugs for PA.
  • A public forum must be held for PA decisions, with a 15-day public comment period. The commissioner must publicly disclose public comments within 48 hours of receipt, and all comments must be retained and publicly available for a stated period.

• Special provisions and exceptions

  • Atypical antipsychotics: PA may be avoided if there is no generic equivalent, the drug was prescribed before 2003, or it remains part of the patient’s current treatment.
  • Automatic PA relief for HIV/AIDS drugs: PA or step therapy cannot be required for any class of HIV/AIDS drugs.
  • Liquid methadone: PA is not required if there is only one version available; if more than one version exists, at least one version must be available without PA.
  • Enteral-tube medications: For oral liquids prescribed for patients with an enteral tube, PA must be automatically approved within 24 hours if the drug is being used for an FDA-approved condition. If multiple liquid versions exist, staff may select the version most compatible with enteral use. By August 1, 2026, the commissioner must implement a streamlined PA form for enteral-tube patients and allow a prescriber to check a box confirming tube use, which will allow automatic PA approval without extra forms.
  • Expansion and timing: The commissioner can require PA for brand-name drugs when a generic is available. Automatic PA can be extended for up to 180 days for new drugs approved by the FDA after July 1, 2005.
  • Public reporting and process: The Formulary Committee sets general PA criteria but does not need to review every drug individually. Before continuing a PA beyond 180 days, the commissioner must follow the PA rules and reporting requirements.
  • HIV/AIDS: The bill explicitly exempts HIV/AIDS drugs from PA or step therapy requirements.

Preferred Drug List (PDL)

• Adoption and management

  • The commissioner must adopt and implement a PDL (with annual updates), and may contract with a vendor to manage it. All contract terms must be publicly disclosed, and the list must be published annually in the State Register and on the DHS website.
  • The commissioner must maintain an archive of previous PDL versions starting January 1, 2024.

• RDAC and orphan drugs

  • The RDAC must be consulted about adding or removing orphan drugs and other related actions, with public notice and comment requirements.

• Process and public involvement

  • Changes to the PDL require public notice, public hearings, and documentation of the health impact and health disparities considerations. The commissioner must disclose the supporting analysis and evidence at least 30 days before a hearing.

• Reimbursement context

  • Whether a drug is on the PDL affects whether it is covered with no prior authorization; drugs not on the PDL may be subject to PA.

Public Notice and Public Participation

• Public notice

  • The bill requires at least 30 days’ notice before Formulary Committee meetings and for the listing of drugs to be discussed. It also requires public notice of proposed deletions or modifications to the PDL.

• Public comment and outreach

  • The RDAC can conduct public outreach on proposed actions, subject to avoiding a quorum of the Formulary Committee during outreach.

Other Notable Provisions

• Open meetings and ethics

  • The Formulary Committee is under the Open Meeting Law; staff communications with RDAC are allowed under specific conditions to preserve committee independence and avoid quorum issues.

• Definitions and terminology

  • The bill defines “preferred drug list” and references “orphan drugs” in line with FDA designations.

• Public records and accessibility

  • Public comments and related documents must be retained and publicly accessible.

What This Could Mean in Practice

• More formal, transparent, and expert-driven decision-making about which drugs are covered and how prior authorization works.
• Greater involvement of rare disease experts and the RDAC in coverage decisions, especially for orphan drugs.
• Stronger conflicts-of-interest safeguards for Formulary Committee members.
• Expanded public input opportunities and disclosure requirements around PA decisions and PDL changes.
• Specific protections and streamlined processes for drugs used in patients requiring enteral tube feeding.

Significant Changes Compared to Current Law (high-level)

• Establishment of the permanent Formulary Committee with a broad, multidisciplinary membership and explicit conflicts-of-interest rules.
• Mandatory collaboration and input from the Minnesota Rare Disease Advisory Council on key drug coverage decisions (prior authorization and orphan drugs on the PDL).
• New public-comment processes and faster, more transparent handling of orphan drugs and drugs with no generically equivalent alternatives.
• Explicit protections to ensure that contracts with PBMs do not hinder expert input.
• New or tightened rules for PA criteria, including auto-approval pathways for enteral-tube patients and specific exceptions for certain drug classes (e.g., HIV/AIDS, some psychiatric medications).
• Formal adoption and ongoing oversight of the PDL with public notice, hearings, and an archival process.

Relevant Terms - Formulary Committee - Prior authorization - Orphan drug - Preferred drug list (PDL) - Minnesota Rare Disease Advisory Council (RDAC) - Rare Disease Advisory Council - Department of Human Services (DHS) - Public comment - Open Meeting Law (Chapter 13D) - Pharmacy Benefit Manager (PBM) - Conflict of interest - Ex officio nonvoting member - Quorum - Public notice - FDA (U.S. Food and Drug Administration) - Enteral tube - Liquid methadone - Public hearing - 62Q.18 / 62Q.184 (PA/step therapy requirements) - HIV/AIDS drug exemptions - Vendor contracting and public disclosure - Public records and archival requirements