State prescription drug purchasing program wins narrow approval in health committee

By changing how prescription drugs are purchased for Medical Assistance and MinnesotaCare enrollees, the Department of Human Services could save money and provide more transparency to the process, Rep. Tina Liebling (DFL-Rochester) told the House Health Finance and Policy Committee Monday.

She sponsors HF8, which would move all drug purchasing for public health care programs to the department.

The department currently handles drug purchasing for fee-for-service patients, who make up about 25% of enrollees. The other 75% are in programs whose drug purchasing is handled by managed care organizations and pharmacy benefits managers, she said.

The bill was approved by an 11-8 party-line vote Monday and referred to the House Commerce Finance and Policy Committee. There is no Senate companion.

“This is saying we can manage pharmacy benefits better all in one place,” Liebling said. “A lot of states are doing this … and they are saving a lot of money.”

The bill is “essentially” the same as one heard in 2019, and is partially included in Gov. Tim Walz’s budget proposal, Liebling said.

A fiscal note was not available, but Liebling said that the change could save as much as $20 million in the first biennium.

Transparent drug pricing

Another primary motivation behind the proposed legislation is improved transparency, testifiers said.

Federal law limits the department from openly discussing specific rebate and drug costs, but — as was seen in the process of creating a uniform drug list using a Drug Formulary Committee – management by the state allows for open meetings, public comment, and accountability to the Legislature, said Matt Anderson, assistant commissioner for Health Care Administration and the state’s Medicaid director.

“The biggest difference is we aren’t operating the program for a profit and so there’s significantly different motivations … associated with that,” Anderson said. “Today, our enrollees have no idea, and no way of finding out, how pharmacy benefits managers are making decisions.”

Sarah Derr, executive director of the Minnesota Pharmacists Association, spoke in favor of the proposed legislation, though she said it needs to account for continued patient access and provider compensation.

Rep. Glenn Gruenhagen (R-Glencoe) expressed concern the change could result in decreased quality of care — especially regarding coordination of care — for people on public programs.

A second part of the bill – which drew opposition from several testifiers and is not included in Walz’s proposal, according to Liebling – would order the department to develop recommendations to expand the program to health plan companies in the private sector as well.

“All we’re asking the commissioner is to look into it for us … and see if there’s a way to do it,” Liebling said.

That particular portion of the bill differs from legislation implemented in other states, and there’s no precedent for how well it would work, said Peter Fjelstad, senior director of the Pharmaceutical Research and Manufacturers of America.

Other initial concerns about that portion of the proposed legislation include whether it would impact a federal program that provides access to discounted prescription drugs and whether Minnesota has the authority.

The prescription drug purchasing program would take effect Jan. 1, 2023, or upon federal approval, whichever is later. Recommendations regarding expansion would be required by Dec. 15, 2023.

The bill is expected to return to the committee for additional discussion and the consideration of any amendments, Liebling said.