MTPR

Governor Vetoes New Regulations On Pharmacy Benefit Managers

May 10, 2019

Gov. Steve Bullock has vetoed a bill attempting to put new regulations on a obscure and influential player in the prescription drug supply chain. While the policy failed to become law in Montana, other states are considering similar legislation.

Pharmacy benefit managers (PBMs) were made a target in the early days of Montana’s 2019 legislative session.

PBMs work out deals between drug manufacturers and insurance companies and government health plans over the supply of medication for patients. PBMs say those deals allow them to negotiate lower drug costs.

But critics like Marilyn Bartlett say companies work as middle-men that profit as a drug passes from manufacturer to the pharmacy.

"You’ve got brokers, insurance companies, PBMs, lablers, stackers, distributors, wholesalers. You have this whole broad spectrum of middle-men that are taking money out before it gets there."

Bartlett is a special projects coordinator for the Montana State Auditor’s office. She and others at the office worked on Senate Bill 71. It attempted to remove spread pricing in the sale of drugs.

An example of this would be if a pharmacy benefit manager pays a retail pharmacy $20 for a medication, but then tells the insurance company it costs $50. 

Bartlett says SB 71 tried to shine a light on and stop this kind profit making within health plans on the individual market. The State Auditor’s office says the legislation could have saved the 70,000 Montanans on individual plans around $8 million in the first year.

PBMs and insurance companies opposed the bill. Insurance companies said it could punish and fine them for bad behavior from PBMs.

PBMs said the bill would tie their hands during negotiations and lead to higher drug costs.

Gov. Bullock wrote in his veto letter that Senate Bill 71 would raise drug costs, not lower them as it’s backers intended. Bullock’s veto letter notes that he signed a handful of other bills attempting to address health care costs in Montana.

However, Marilyn Bartlett says none of those bills solve spread-pricing or save consumers money on prescription drugs. 

Bartlett says half a dozen other states are considering legislation similar to SB 71. A proposal in Maine passed out of a legislative committee earlier this week.