PBM Reverse Auction Will Save Tens Millions of Dollars Annually; Minnesota Coalition Comes Together to Support Legislation this Session
SAINT PAUL, MN – Leaders across Minnesota are joining together in support of an unprecedented, bipartisan effort in the legislature that will help modernize how the state purchases prescription medicines through its pharmacy benefit manager or “PBM.” Legislation (SF2178/HF2327) authored by Representative Michael Howard, DFL-Richfield, and Senator Michelle Benson, R-Ham Lake, establishes a new PBM reverse auction process that will create cost transparent and dynamic competition among PBMs seeking to win a contract with the State of Minnesota.
The legislation will put the PBM reverse auction in place as a modernized, high-value method for Minnesota’s State Employee Group Insurance Program (SEGIP ) to procure a PBM contractor that will maximize the value of State funds spent to purchase prescription drug benefits. The legislation is moving forward in both the House and Senate versions of the State Government Finance Omnibus bills. Late last month, House members adopted the PBM reverse auction by a bipartisan vote following a House Floor debate.
PBMs are middlemen that manage prescription drug plans and benefits for health insurance plans. They wield significant market power by determining what states, consumers and businesses pay for medicines, as well as how pharmacies are reimbursed. How PBMs determine cost is extremely complex, and this legislation will help ensure greater prescription savings are going directly to Minnesotans.
“The House vote for adoption marks a big step forward for Minnesota’s effort to check rising drug costs. It puts SEGIP in the driver’s seat to secure the best possible benefits for tens of thousands of Minnesota public employees. States that have adopted PBM reverse auctions are in a position to save State funds, while providing better benefits for public employees, lowering their copays, and reducing health insurance premiums,” said Rep. Howard.
“Reverse auction is an opportunity to bring innovation to state government. Many states have used reverse auctions to save money and improve quality for state employees,” said Sen. Benson. “It is time for Minnesota to join states like New Jersey and New Hampshire to embrace this innovative approach to managing our state PBM.”
A growing number of Minnesota organizations, among them members of the PBM Accountability Project of Minnesota, are standing up to express support for enactment of the PBM reverse auction legislation. These include the Inter Faculty Organization (IFO), the Minnesota Association of Public Employees (MAPE), the Teamsters Local 320, Hemophilia Foundation of Minnesota/Dakotas, the Minnesota Rural Health Association, the Minnesota Pharmacists Association (MPhA) and the Freedom Foundation:
“This legislation will substantially reduce our members’ pharmaceutical and out-of-pocket costs, while providing state employees more input into their health care benefits,” said Brent Jeffers, IFO President. “We are thankful this initiative has strong bipartisan support in the legislature and is being championed by a variety of important stakeholder groups across the state.”
“From taking care of Minnesota’s most vulnerable to protecting our environment, MAPE members do outstanding work to serve our state every day. Now we’re standing together across Minnesota to advance PBM reform that will rein in growing prescription costs and greatly benefit thousands of state employees and their families,” said Megan Dayton, MAPE Statewide President.
“Pharmacists are dedicated to providing high quality care which includes access to affordable prescription medications. In order to provide high quality care, MPhA has taken an active role to bring meaningful PBM reform to Minnesota—this legislation puts patients first instead of PBM middlemen and is an important step forward,” said Sarah Derr, PharmD, Executive Director of MPhA.
“Republicans, Democrats and Independents are all coming together to reduce state spending,” stated Annette Meeks, Founder and CEO of the Freedom Foundation of Minnesota. “This is about good governance and transparency to the public, using free market competition to save taxpayers money. It’s a win-win for everyone.”
“The Minnesota Rural Health Association advocates every day for health care solutions for rural communities – addressing cost and access issues that significantly impact Greater Minnesota,” said Mark Jones, Executive Director of MRHA. “It is wonderful to see lawmakers from both sides of the aisle come together and advance meaningful health care reform that puts patients first.”