Law to address prescription drug prices takes effect
The new law, signed by Gov. Walz on May 19, 2019, increases transparency in prescription drug costs
As of Jan. 1, pharmacy benefit managers operating in Minnesota are required to be licensed and are subject to increased regulation and reporting requirements due to a new law signed by Gov. Tim Walz that aims to increase transparency in prescription drug costs.
“For too long, Minnesotans have been kept in the dark about why their prescription drug prices are so high,” Walz said in a press release Thursday. “This new law is a step in the right direction to begin to take a close look at those costs and ultimately, work to create additional policy solutions to lower drug prices for Minnesotans.”
Pharmacy benefit managers (PBMs) are hired by health insurance companies and employers to manage prescription drug benefits. PBMs can be tasked with processing or paying pharmacy claims, creating or updating prescription drug formularies, administering and negotiating rebates from drug manufacturers or establishing a pharmacy network.
Under the new law, the Minnesota Department of Commerce has overall licensing, transparency reporting and enforcement authority over PBMs, while the Minnesota Department of Health provides analysis and approval of network adequacy reporting. The new authority and reporting requirements will give the state the ability to understand the relationship between PBMs and insurance companies, as well as the associated costs and could help inform policy solutions to address unaffordable drug costs.
“Commerce is proud to have worked with the Minnesota Legislature on the pharmacy benefit managers legislation last session,” said Commerce Commissioner Steve Kelley. “We hope this additional tool will ultimately create more transparency in drug prices for consumers across the state and will help inform public policy makers’ efforts to lower drug prices. We will continue to engage with our regulated entities and stakeholders as well as key legislators as this process unfolds in 2020.”
As of Jan. 1, 40 PBMs are now licensed in the State of Minnesota to do business. The Department of Commerce is in the rulemaking process to implement the law, including the transparency reporting requirements.
Commerce staff are soliciting comments from stakeholders and are finalizing the formation of an advisory committee to provide input on draft rules. The committee is anticipated to hold its first meeting in January with a public meeting to follow. Interested parties can follow the process on Commerce’s website at mn.gov/commerce/industries/insurance/licensing/#2.
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