Montana Lawmakers Consider New Regulations To Curb Prescription Drug Prices

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By: Corin Cates-Carney

An obscure but important player in the health care industry is in the crosshairs of Montana elected officials, who are proposing new regulations aimed at reducing the cost of prescription drugs.

State Insurance Commissioner Matt Rosendale, an elected Republican, asked state lawmakers Friday to consider additional rules on the contracts between health insurance companies and what he refers to as the middlemen of the pharmaceutical drug industry.

“Right now the three largest PBMs control 85 percent of the pharmaceuticals. We’re talking big, big money folks,” Rosendale says.

PMBs are pharmacy benefit managers. They negotiate deals between insurance companies, drug manufacturers, retail pharmacies, and government health plans. Those deals along the prescription drug supply chain are often complicated and opaque.

Critics say that leaves room for PBMs to profit from charging unfair prices, but PBM companies say the deals they strike actually lower drug costs.

Janell Williams with the State Auditor’s Office says Senate Bill 71 would regulate contracts between health insurers and PBMs in a way that would prevent PBMs from skiming additional money off their deals.

“It requires that the amount that a health insurer pays for a prescription be the same amount that the pharmacy receives for the drug, no spread,” Williams said.

An example of a pharmacy benefit manager using spread pricing would be if the PBM negotiated a deal with a retail pharmacy to sell a medication for $30, but then tells the an insurance company it costs $50.

Shining a light on, or trying to regulate, the pharmaceutical supply chain is difficult. Courts have ruled that federal law preempts some state imposed guidelines for PBMs. But Rosendale’s office says it’s come up with a way around that that could survive a potential legal challenge.

Although Rosendale’s office says the end result of their legislation is to change the behavior of PBMs, nowhere in the bill is “pharmacy benefit manager” or “PBM” written.

Read more from Montana Public Radio