Whitmer Signs Bills to Regulate Pharmacy Benefit Managers

By David Eggert | February 24, 2022

DELTA TOWNSHIP, Mich. (AP) — Gov. Gretchen Whitmer on Wednesday signed bipartisan bills into law that are designed to reduce prescription drug costs by regulating pharmacy benefit managers that oversee coverage for employers, insurers and others.

Parts of the laws took effect immediately while others, including licensing requirements and bans on “spread pricing” and “gag clauses,” begin in 2024.

Whitmer said the changes, which were recommended by a task force she created in 2020, will improve transparency and ensure that Michigan residents “have access to all the information about the back-end cost and profit of their prescription medication. This will help lower inflated prices.”

She signed the legislation at a Lansing-area Meijer where she was joined by Republican and Democratic lawmakers.

Three pharmacy benefits managers, or PBMs, dominate the U.S. market: CVS Caremark, Express Scripts and OptumRx. They are third-party administrators that set up lists of covered drugs, determine copays, negotiate rebates for some drugs to help offset high initial or list prices, and do other behind-the-scenes work.

They have come under growing scrutiny for their role in drug costs. Starting in 2024, they can no longer charge a plan more for a medicine than they pay the pharmacy, nor can they prohibit a pharmacist from discussing costs with a patient or selling a cheaper alternative.

In 2018, then-President Donald Trump signed bills to stop insurers and PBMs from barring pharmacists from telling consumers when paying cash would be cheaper than using insurance.

“Many states started reining in the role of PBMs years ago. Michiganders have literally been paying the price, and that stops now,” said state Rep. Julie Calley, who sponsored the main bill. The Portland Republican said it “is one of the most assertive in the nation.”

CVS Health, whose Caremark business is one of the country’s largest PBMs, had asked the Democratic governor to veto the legislation, calling parts that directly affect patients “simply bad policy.” It urged legislators to instead focus “on addressing the true source of higher costs: the high list prices set by big drug companies.”

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