SF5302

Purpose

• Establish a state framework to limit how much certain prescription drugs can cost in Minnesota by setting a maximum fair price for drugs covered under the Medicare Drug Price Negotiation Program. The goal is to reduce out-of-pocket costs and overall spending for residents, while preserving access to medicines.

Key terms and definitions

• Maximum fair price: the price set by the United States Department of Health and Human Services under 42 U.S.C. 1320f-3.
• NADAC: the national average drug acquisition cost.
• Referenced drug: a prescription drug that is subject to the maximum fair price.
• Manufacturer: the drug maker as defined in Minnesota law.
• Health plan: insurance plans that pay for prescription drugs.
• Pharmacy benefit manager (PBM): a licensed manager that administers prescription drug benefits.
• Dispensing fee: the fee charged for dispensing a drug.
• Prescription Drug Affordability Board (PDAB): the state board established to help oversee drug affordability and pricing in Minnesota.
• Minnesota Statutes chapter 62Q and sections 62J.87 and 62J.91: the legal framework within which these changes operate.

Main provisions

• Price limits for manufacturers

  • A manufacturer may not sell a referenced drug in Minnesota for more than the maximum fair price, plus any applicable dispensing fees and provider administration fees, whether the sale is in person, by mail, or other means.

• Reimbursement rules for health plans and PBMs

  • Health plans and PBMs must reimburse pharmacies for a referenced drug at a price that is at least the maximum fair price or NADAC (whichever is greater) plus the dispensing fee.
  • The law does not prevent a pharmacy from receiving a dispensing fee higher than the maximum fair price.

• Price transparency and data sharing with PDAB

  • Upon request, a health plan or PBM must provide detailed financial information to the Prescription Drug Affordability Board. This includes: administrative fees, formulary management fees, rebate retention, network access fees, shared savings programs, and the total and final payment details for dispensing a referenced drug.
  • The information must include all related adjustments and reconciliations and follow the data requirements in section 62J.91(3).

• Prohibition on withdrawing drugs to dodge price limits

  • Manufacturers are prohibited from removing a referenced drug from sale or distribution in the state to avoid the rate limits, unless they give at least 180 days’ written notice to the commissioner of health before withdrawal.
  • If a manufacturer withdraws a referenced drug in violation of this rule, the commissioner may impose a civil penalty.

• Penalties for withdrawal

  • The civil penalty for each withdrawn referenced drug is the greater of: (1) $100,000, or (2) the total annual savings for the drug as determined by the Prescription Drug Affordability Board.

Significant changes to existing law

• Introduces a new price-control framework for a subset of prescription drugs in Minnesota under Minnesota Statutes chapter 62Q.
• Establishes binding maximum fair price and NADAC-based reimbursement floor for health plans and PBMs, altering current pricing and reimbursement practices.
• Creates duties for health plans, PBMs, and manufacturers to disclose pricing and cost details to the PDAB, increasing transparency.
• Adds enforcement mechanisms and penalties for manufacturers that withdraw drugs to evade price limits, including a specific monetary penalty tied to potential savings.
• Expands the role and authority of the Prescription Drug Affordability Board in monitoring and auditing drug pricing and related financial data.

Relevant Terms - Maximum fair price - NADAC (National Average Drug Acquisition Cost) - Referenced drug - Manufacturer - Health plan - Pharmacy benefit manager (PBM) - Dispensing fee - Provider administration fee - Prescription Drug Affordability Board (PDAB) - 42 U.S.C. 1320f-3 (United States Code citation for the maximum fair price) - Minnesota Statutes chapter 62Q - 62J.87 (PDAB-related provision) - 62J.91 (data requirements) - Dispensing fee - Rebate retention - Network access fees - Annual savings (as determined by PDAB) - Withdrawal of drug - Civil penalty