by Scott McClallen
The Michigan Senate approved a bipartisan plan to reduce prescription drug prices in the state.
House Bill 4348 aims to save patients money by regulating pharmacy benefit managers (PBMs) who serve as facilitators between health plans, drug manufacturers and pharmacists.
The plan aims to require individuals seeking PBM licensure to apply to the Director of the Department of Insurance and Financial Services (DIFS). The DFIS would be allowed to refuse to issue a PBM license for a past licensure revocation or if the PBM isn’t financially viable. Applicants would have to apply to the DIFS director to renew licensure and pay regular fees.
Rep. John Damoose, R-Harbor Springs, blamed PBMs for rising drug prices, saying they add fees retroactively, limit purchases and hike prices. However, 40-year high inflation also likely contributes.
“Skyrocketing drug prices are an explosive problem for Michigan patients,” Damoose said in a statement. “This plan will help reduce prices for families by reining in costly, behind-the-scenes maneuvers by pharmaceutical middlemen.”
The plan aims to stop “spread pricing” – PBMs charging wildly different prices for the same drug. The bill seeks to require PBMs to file an annual transparency report with the DIFS director, who would compile reports and send them to the legislature.
The PBM would have to “provide a reasonably adequate and accessible” retail network and would prohibit them from charging a pharmacy to process claims electronically, as well as regulate steps before hiking certain drug costs.
A Senate Fiscal Agency report estimates an annual program cost at $330,000 – or $110,000 per three additional full-time equivalent DIFS employees to administer the PBM licensure program. However, exact costs vary. The bill would allow PBM program fines and fees, but it’s unclear if that revenue would completely offset expenses.
The bill would take effect on Jan. 1, 2024.
Gov. Gretchen Whitmer targeted “kitchen-table” issues in her State of the State address to spend billions of federal funding. It’s unclear if this is one of them because Whitmer’s office hasn’t responded to a request for comment.
The bill now returns to the House for final passage before heading to Whitmer.
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Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.
Photo “Pharmacist Consult” by Oregon State University. CC BY-SA 2.0.
