Minnesota 2025-2026 Regular Session

Minnesota House Bill HF2851 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	1.1 A bill for an act
2	2	1.2 relating to insurance; modifying the reverse auction procurement requirement for
3	3	1.3 SEGIP pharmacy benefit contracts; prohibiting the use of spread pricing by
4	4	1.4 pharmacy benefit managers; increasing pharmacy benefit manager license
5	5	1.5 application fees; imposing fiduciary duties on pharmacy benefit managers;
6	6	1.6 appropriating money; amending Minnesota Statutes 2024, sections 62W.02, by
7	7	1.7 adding a subdivision; 62W.03, subdivisions 2, 3, 5; 62W.04; 62W.05, by adding
8	8	1.8 a subdivision; 62W.06, subdivision 2; 62W.08; 62W.13; proposing coding for
9	9	1.9 new law in Minnesota Statutes, chapter 62W.
10	10	1.10BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
11	11	1.11 Section 1. Minnesota Statutes 2024, section 62W.02, is amended by adding a subdivision
12	12	1.12to read:
13	13	1.13 Subd. 21.Spread pricing."Spread pricing" means any model of prescription drug
14	14	1.14pricing in which a pharmacy benefit manager charges a health plan a contracted price for
15	15	1.15prescription drugs, and the contracted price for the prescription drugs differs from the amount
16	16	1.16the pharmacy benefit manager directly or indirectly pays the pharmacist or pharmacy for
17	17	1.17pharmacist services.
18	18	1.18 Sec. 2. Minnesota Statutes 2024, section 62W.03, subdivision 2, is amended to read:
19	19	1.19 Subd. 2.Application.(a) A pharmacy benefit manager seeking a license shall apply to
20	20	1.20the commissioner of commerce on a form prescribed by the commissioner. The application
21	21	1.21form must include at a minimum the following information:
22	22	1.22 (1) the name, address, and telephone number of the pharmacy benefit manager;
23	23	1.23 (2) the name and address of the pharmacy benefit manager agent for service of process
24	24	1.24in this state; and
25	25	1Sec. 2.
26	26	REVISOR SGS/AC 25-0471503/14/25
27	27	State of Minnesota
28	28	This Document can be made available
29	29	in alternative formats upon request
30	30	HOUSE OF REPRESENTATIVES
31	31	H. F. No. 2851
32	32	NINETY-FOURTH SESSION
33	33	Authored by Elkins03/26/2025
34	34	The bill was read for the first time and referred to the Committee on Health Finance and Policy 2.1 (3) the name, address, official position, and professional qualifications of each person
35	35	2.2responsible for the conduct of affairs of the pharmacy benefit manager, including all members
36	36	2.3of the board of directors, board of trustees, executive committee, or other governing board
37	37	2.4or committee; the principal officers in the case of a corporation; or the partners or members
38	38	2.5in the case of a partnership or association.
39	39	2.6 (b) Each application for licensure must be accompanied by a nonrefundable fee of $8,500
40	40	2.7determined by the commissioner but in no event less than $15,000. The fees collected under
41	41	2.8this subdivision shall be deposited in the general fund.
42	42	2.9 (c) Within 30 days of receiving an application, the commissioner may require additional
43	43	2.10information or submissions from an applicant and may obtain any document or information
44	44	2.11reasonably necessary to verify the information contained in the application. Within 90 days
45	45	2.12after receipt of a completed application, the network adequacy report required under section
46	46	2.1362W.05, and the applicable license fee, the commissioner shall review the application and
47	47	2.14issue a license if the applicant is deemed qualified under this section. If the commissioner
48	48	2.15determines the applicant is not qualified, the commissioner shall notify the applicant and
49	49	2.16shall specify the reason or reasons for the denial.
50	50	2.17 Sec. 3. Minnesota Statutes 2024, section 62W.03, subdivision 3, is amended to read:
51	51	2.18 Subd. 3.Renewal.(a) A license issued under this chapter is valid for one year. To renew
52	52	2.19a license, an applicant must submit a completed renewal application on a form prescribed
53	53	2.20by the commissioner, the network adequacy report required under section 62W.05, and a
54	54	2.21renewal fee of $8,500 determined by the commissioner but in no event less than $15,000.
55	55	2.22The fees collected under this paragraph shall be deposited in the general fund. The
56	56	2.23commissioner may request a renewal applicant to submit additional information to clarify
57	57	2.24any new information presented in the renewal application.
58	58	2.25 (b) A renewal application submitted after the renewal deadline date must be accompanied
59	59	2.26by a nonrefundable late fee of $500 determined by the commissioner but in no event less
60	60	2.27than $1,000. The fees collected under this paragraph shall be deposited in the general fund.
61	61	2.28 (c) The commissioner may deny the renewal of a license for any of the following reasons:
62	62	2.29 (1) the pharmacy benefit manager has been determined by the commissioner to be in
63	63	2.30violation or noncompliance with federal or state law; or
64	64	2.31 (2) the pharmacy benefit manager has failed to timely submit a renewal application and
65	65	2.32the information required under paragraph (a).
66	66	2Sec. 3.
67	67	REVISOR SGS/AC 25-0471503/14/25 3.1In lieu of a denial of a renewal application, the commissioner may permit the pharmacy
68	68	3.2benefit manager to submit to the commissioner a corrective action plan to cure or correct
69	69	3.3deficiencies.
70	70	3.4 Sec. 4. Minnesota Statutes 2024, section 62W.03, subdivision 5, is amended to read:
71	71	3.5 Subd. 5.Penalty Penalties.(a) If a pharmacy benefit manager acts without a license,
72	72	3.6the pharmacy benefit manager may be subject to a fine of $5,000 determined by the
73	73	3.7commissioner but in no event less than $10,000 per day for the period the pharmacy benefit
74	74	3.8manager is found to be in violation.
75	75	3.9 (b) Except as expressly provided otherwise in this chapter, the commissioner may impose
76	76	3.10a fine on a pharmacy benefit manager of up to $25,000 per violation of any provision in
77	77	3.11this chapter. For purposes of this paragraph, each occurrence is considered a separate
78	78	3.12violation.
79	79	3.13 (c) Any penalties collected under this subdivision shall be deposited in the general fund.
80	80	3.14 Sec. 5. Minnesota Statutes 2024, section 62W.04, is amended to read:
81	81	3.15 62W.04 PHARMACY BENEFIT MANAGER GENERAL BUSINESS PRACTICES.
82	82	3.16 (a) A pharmacy benefit manager must exercise good faith and fair dealing in the
83	83	3.17performance of its contractual duties. A provision in a contract between a pharmacy benefit
84	84	3.18manager and a health carrier or a network pharmacy that attempts to waive or limit this
85	85	3.19obligation is void.
86	86	3.20 (b) A pharmacy benefit manager must notify a health carrier in writing of any activity,
87	87	3.21policy, or practice of the pharmacy benefit manager that directly or indirectly presents a
88	88	3.22conflict of interest with the duties imposed in this section.
89	89	3.23 (c) A pharmacy benefit manager has a fiduciary duty to a health carrier and must
90	90	3.24discharge that duty in accordance with the provisions of state and federal law.
91	91	3.25 (d) A pharmacy benefit manager must perform its duties with care, skill, prudence,
92	92	3.26diligence, and professionalism.
93	93	3.27 (e) A pharmacy benefit manager must not charge a pharmacy a fee related to the
94	94	3.28adjudication of a claim, including but not limited to:
95	95	3.29 (1) receiving and processing a pharmacy claim;
96	96	3.30 (2) developing or managing claims processing services in a pharmacy benefit manager
97	97	3.31network; or
98	98	3Sec. 5.
99	99	REVISOR SGS/AC 25-0471503/14/25 4.1 (3) participating in a pharmacy benefit network.
100	100	4.2 (f) A pharmacy benefit manager must not require pharmacy accreditation standards or
101	101	4.3certification requirements that are inconsistent with, more stringent than, or in addition to
102	102	4.4requirements established by the Board of Pharmacy or as permitted under this chapter.
103	103	4.5 Sec. 6. [62W.045] PHARMACY BENEFIT MANAGER GENERAL
104	104	4.6REIMBURSEMENT PRACTICES.
105	105	4.7 (a) A pharmacy benefit manager must not reimburse a pharmacy in an amount less than
106	106	4.8the amount the pharmacy benefit manager reimburses a pharmacy benefit manager affiliate
107	107	4.9or subsidiary for providing the same prescription drug.
108	108	4.10 (b) A pharmacy benefit manager must not pay or reimburse a pharmacy for the ingredient
109	109	4.11drug product component less than the national average drug acquisition cost or, if the national
110	110	4.12drug acquisition cost is unavailable, the wholesale acquisition cost.
111	111	4.13 (c) A pharmacy benefit manager must not make or permit any reduction of payment for
112	112	4.14a prescription drug or service either directly or indirectly to a pharmacy under a reconciliation
113	113	4.15process to an effective rate of reimbursement, direct or indirect remuneration fees, or any
114	114	4.16other reduction or aggregate reduction of payment.
115	115	4.17 Sec. 7. Minnesota Statutes 2024, section 62W.05, is amended by adding a subdivision to
116	116	4.18read:
117	117	4.19 Subd. 4.Network service area requirements.A pharmacy benefit manager must
118	118	4.20establish a pharmacy network service area consistent with the requirements under section
119	119	4.2162K.13 for every pharmacy network subject to review under this section.
120	120	4.22 Sec. 8. Minnesota Statutes 2024, section 62W.06, subdivision 2, is amended to read:
121	121	4.23 Subd. 2.Transparency report to commissioner.(a) Beginning June 1, 2020, and
122	122	4.24annually thereafter, each pharmacy benefit manager must submit to the commissioner a
123	123	4.25transparency report containing data from the prior calendar year as it pertains to plan sponsors
124	124	4.26doing business in Minnesota. The report must contain the following information:
125	125	4.27 (1) the aggregate wholesale acquisition costs from a drug manufacturer or wholesale
126	126	4.28drug distributor for each therapeutic category of prescription drugs for all of the pharmacy
127	127	4.29benefit manager's plan sponsor clients, and these costs net of all rebates and other fees and
128	128	4.30payments, direct or indirect, from all sources;
129	129	4Sec. 8.
130	130	REVISOR SGS/AC 25-0471503/14/25 5.1 (2) the aggregate amount of all rebates that the pharmacy benefit manager received from
131	131	5.2all drug manufacturers for all of the pharmacy benefit manager's plan sponsor clients. The
132	132	5.3aggregate amount of rebates must include any utilization discounts the pharmacy benefit
133	133	5.4manager receives from a drug manufacturer or wholesale drug distributor;
134	134	5.5 (3) the aggregate of all fees from all sources, direct or indirect, that the pharmacy benefit
135	135	5.6manager received for all of the pharmacy benefit manager's plan sponsor clients;
136	136	5.7 (4) the aggregate retained rebates and other fees, as listed in clause (3), that the pharmacy
137	137	5.8benefit manager received from all sources, direct or indirect, that were not passed through
138	138	5.9to plan sponsors;
139	139	5.10 (5) the aggregate retained rebate and fees percentage;
140	140	5.11 (6) the highest, lowest, and mean aggregate retained rebate and fees percentage for all
141	141	5.12of the pharmacy benefit manager's plan sponsor clients; and
142	142	5.13 (7) de-identified claims level information in electronic format that allows the
143	143	5.14commissioner to sort and analyze the following information for each claim:
144	144	5.15 (i) the drug and quantity for each prescription;
145	145	5.16 (ii) whether the claim required prior authorization;
146	146	5.17 (iii) patient cost-sharing paid on each prescription. This data is classified pursuant to
147	147	5.18paragraph (d);
148	148	5.19 (iv) the amount paid to the pharmacy for each prescription, net of the aggregate amount
149	149	5.20of fees or other assessments imposed on the pharmacy, including point-of-sale and retroactive
150	150	5.21charges. This data is classified pursuant to paragraph (d);
151	151	5.22 (v) any spread between the net amount paid to the pharmacy in item (iv) and the amount
152	152	5.23charged to the plan sponsor. This data is classified pursuant to paragraph (d);
153	153	5.24 (vi) identity of the pharmacy for each prescription;
154	154	5.25 (vii) whether the pharmacy is, or is not, under common control or ownership with the
155	155	5.26pharmacy benefit manager;
156	156	5.27 (viii) whether the pharmacy is, or is not, a preferred pharmacy under the plan;
157	157	5.28 (ix) whether the pharmacy is, or is not, a mail order pharmacy; and
158	158	5.29 (x) whether enrollees are required by the plan to use the pharmacy.
159	159	5.30 (b) Within 60 days upon receipt of the transparency report, the commissioner shall
160	160	5.31publish the report from each pharmacy benefit manager on the Department of Commerce's
161	161	5Sec. 8.
162	162	REVISOR SGS/AC 25-0471503/14/25 6.1website, with the exception of data considered trade secret information under section 13.37.
163	163	6.2The transparency report must be published in such a way as to not disclose the identity of
164	164	6.3a specific plan sponsor, the prices charged for a specific prescription drug or classes of
165	165	6.4drugs, or the amount of any rebates provided for a specific prescription drug or classes of
166	166	6.5drugs.
167	167	6.6 (c) For purposes of this subdivision, the aggregate retained rebate and fee percentage
168	168	6.7must be calculated for each plan sponsor for rebates and fees in the previous calendar year
169	169	6.8as follows:
170	170	6.9 (1) the sum total dollar amount of rebates and fees from all drug manufacturers for all
171	171	6.10utilization of enrollees of a plan sponsor that was not passed through to the plan sponsor;
172	172	6.11and
173	173	6.12 (2) divided by the sum total dollar amount of all rebates and fees received from all
174	174	6.13sources, direct or indirect, for all enrollees of a plan sponsor.
175	175	6.14 (d) Data, documents, materials, or other information in the possession or control of the
176	176	6.15commissioner of commerce that are obtained by, created by, or disclosed to the commissioner
177	177	6.16pursuant to paragraph (a), clause (7), items (iii), (iv), and (v), are classified as confidential,
178	178	6.17protected nonpublic, or both. Those data, documents, materials, or other information are
179	179	6.18not subject to subpoena, and are not subject to discovery or admissible in evidence in any
180	180	6.19private civil action. However, the commissioner may use the data, documents, materials,
181	181	6.20or other information in the furtherance of a regulatory or legal action brought as a part of
182	182	6.21the commissioner's official duties. The commissioner shall not otherwise make the data,
183	183	6.22documents, materials, or other information public without the prior written consent of the
184	184	6.23pharmacy benefit manager. Neither the commissioner nor any person who received data,
185	185	6.24documents, materials, or other information while acting under the authority of the
186	186	6.25commissioner are permitted or required to testify in any private civil action concerning data,
187	187	6.26documents, materials, or information subject to this paragraph that are classified as
188	188	6.27confidential, protected nonpublic, or both.
189	189	6.28 (e) The commissioner may request from the commissioner of health, and the
190	190	6.29commissioner of health must provide, any information obtained by the commissioner of
191	191	6.30health pursuant to the reporting required under section 62J.84, subdivision 12. Information
192	192	6.31obtained under this paragraph may be used in any enforcement action brought by the
193	193	6.32commissioner.
194	194	6Sec. 8.
195	195	REVISOR SGS/AC 25-0471503/14/25 7.1 Sec. 9. Minnesota Statutes 2024, section 62W.08, is amended to read:
196	196	7.2 62W.08 MAXIMUM ALLOWABLE COST PRICING.
197	197	7.3 (a) With respect to each contract and contract renewal between a pharmacy benefit
198	198	7.4manager and a pharmacy, the pharmacy benefits manager must:
199	199	7.5 (1) provide to the pharmacy, at the beginning of each contract and contract renewal, the
200	200	7.6sources utilized to determine the maximum allowable cost pricing of the pharmacy benefit
201	201	7.7manager;
202	202	7.8 (2) update any maximum allowable cost price list at least every seven business days,
203	203	7.9noting any price changes from the previous list, and within seven calendar days from:
204	204	7.10 (i) an increase of ten percent or more in the pharmacy acquisition cost from 60 percent
205	205	7.11or more of the pharmaceutical wholesalers doing business in Minnesota;
206	206	7.12 (ii) a change in the methodology on which the maximum allowable cost price list is
207	207	7.13based; or
208	208	7.14 (iii) a change in the value of a variable involved in the methodology;
209	209	7.15 (3) provide a means by which network pharmacies may promptly review current prices
210	210	7.16in an electronic, print, or telephonic format within one business day at no cost to the
211	211	7.17pharmacy;
212	212	7.18 (3) (4) maintain a procedure to eliminate products from the list of drugs subject to
213	213	7.19maximum allowable cost pricing in a timely manner in order to remain consistent with
214	214	7.20changes in the marketplace;
215	215	7.21 (4) (5) ensure that the maximum allowable cost prices are not set below sources utilized
216	216	7.22by the pharmacy benefits manager nor set below the pharmacy acquisition cost; and
217	217	7.23 (5) (6) upon request of a network pharmacy, identify each maximum allowable price
218	218	7.24list that applies to the network pharmacy, and disclose the sources utilized for setting
219	219	7.25maximum allowable cost price rates on each maximum allowable cost price list included
220	220	7.26under the contract and identify each maximum allowable cost price list that applies to the
221	221	7.27network pharmacy., including the following:
222	222	7.28 (i) average acquisition cost, including national average drug acquisition cost;
223	223	7.29 (ii) average manufacturer price;
224	224	7.30 (iii) average wholesale price;
225	225	7.31 (iv) brand effective rate or generic effective rate;
226	226	7Sec. 9.
227	227	REVISOR SGS/AC 25-0471503/14/25 8.1 (v) discount indexing;
228	228	8.2 (vi) federal upper limits;
229	229	8.3 (vii) wholesale acquisition cost; and
230	230	8.4 (viii) any other term that a pharmacy benefit manager or plan sponsor may use to establish
231	231	8.5the maximum allowable cost price for a prescription drug.
232	232	8.6A The pharmacy benefit manager must make the list of the maximum allowable costs cost
233	233	8.7price list available to a contracted network pharmacy in a format that is readily accessible
234	234	8.8and usable to the network pharmacy.
235	235	8.9 (b) A pharmacy benefit manager must not place a prescription drug on a maximum
236	236	8.10allowable cost list unless the drug is available for purchase by pharmacies in this state from
237	237	8.11a national or regional drug wholesaler and is not obsolete.
238	238	8.12 (c) Each contract between a pharmacy benefit manager and a pharmacy must include
239	239	8.13provide a process to appeal, investigate, and resolve disputes regarding maximum allowable
240	240	8.14cost pricing that includes the ability of a pharmacy to challenge the maximum allowable
241	241	8.15cost price if the price:
242	242	8.16 (1) a 15-business-day limit on the right to appeal following the initial claim does not
243	243	8.17meet the requirements of this chapter; or
244	244	8.18 (2) a requirement that the appeal be investigated and resolved within seven business
245	245	8.19days after the appeal is received; and is below the pharmacy acquisition cost.
246	246	8.20 (3) a requirement that a pharmacy benefit manager provide a reason for any appeal denial
247	247	8.21and identify the national drug code of a drug that may be purchased by the pharmacy at a
248	248	8.22price at or below the maximum allowable cost price as determined by the pharmacy benefit
249	249	8.23manager.
250	250	8.24 (d) If an appeal is upheld, the pharmacy benefit manager must make an adjustment to
251	251	8.25the maximum allowable cost price no later than one business day after the date of
252	252	8.26determination. The pharmacy benefit manager must make the price adjustment applicable
253	253	8.27to all similarly situated network pharmacy providers as defined by the plan sponsor. The
254	254	8.28appeal process must include:
255	255	8.29 (1) a dedicated telephone number and email address or website for the purpose of
256	256	8.30submitting an appeal; and
257	257	8.31 (2) the ability to submit an appeal directly to the pharmacy benefit manager regarding
258	258	8.32the pharmacy benefit plan or program or through a pharmacy service administrative program.
259	259	8Sec. 9.
260	260	REVISOR SGS/AC 25-0471503/14/25 9.1 (e) Any appeal must be submitted to the pharmacy benefit manager within 30 business
261	261	9.2days from the date of the initial claim. The pharmacy benefit manager must investigate and
262	262	9.3resolve the appeal within 30 business days from the date the appeal is received.
263	263	9.4 (f) If the appeal is upheld, the pharmacy benefit manager must:
264	264	9.5 (1) make an adjustment to the maximum allowable cost price list to at least the pharmacy
265	265	9.6acquisition cost no later than one business day after the date of determination and make the
266	266	9.7price adjustment applicable to all similarly situated network providers as defined by the
267	267	9.8plan sponsor;
268	268	9.9 (2) permit the challenging pharmacy to reverse and rebill the claim in question; and
269	269	9.10 (3) provide to the pharmacy the National Drug Code number on which the adjustment
270	270	9.11is based.
271	271	9.12 (g) If the appeal is denied, the pharmacy benefit manager must provide the challenging
272	272	9.13pharmacy with the reason for the denial and:
273	273	9.14 (1) identify the National Drug Code number and the names of the national or regional
274	274	9.15pharmaceutical wholesalers operating in Minnesota that have the drug currently in stock at
275	275	9.16a price below the maximum allowable cost price; or
276	276	9.17 (2) if the National Drug Code number provided by the pharmacy benefit manager is not
277	277	9.18available below the pharmacy acquisition cost from the pharmaceutical wholesaler from
278	278	9.19whom the pharmacy purchases the majority of prescription drugs for resale, then the
279	279	9.20pharmacy benefit manager must adjust the maximum allowable cost price above the
280	280	9.21challenging pharmacy's pharmacy acquisition cost and permit the pharmacy to reverse and
281	281	9.22rebill each claim affected by the inability to procure the drug at a cost that is equal to or
282	282	9.23less than the previously challenged maximum allowable cost price.
283	283	9.24 (h) A pharmacy may decline to provide a prescription drug or services to a patient or
284	284	9.25pharmacy benefit manager if, as a result of a maximum allowable cost pricing, a pharmacy
285	285	9.26is to be paid less than the pharmacy acquisition cost of the pharmacy dispensing the
286	286	9.27prescription drug or providing the pharmacy services.
287	287	9.28 Sec. 10. Minnesota Statutes 2024, section 62W.13, is amended to read:
288	288	9.29 62W.13 RETROACTIVE ADJUSTMENTS.
289	289	9.30 No pharmacy benefit manager shall directly or indirectly retroactively adjust deny or
290	290	9.31reduce a claim or aggregate of claims for reimbursement submitted by a pharmacy for a
291	291	9.32prescription drug, unless the adjustment is a result of a:
292	292	9Sec. 10.
293	293	REVISOR SGS/AC 25-0471503/14/25 10.1 (1) pharmacy audit conducted in accordance with section 62W.09 determining that:
294	294	10.2 (i) the original claim was submitted fraudulently;
295	295	10.3 (ii) the original claim payment was incorrect because the pharmacy was already paid
296	296	10.4for the prescription drug or service; or
297	297	10.5 (iii) the prescription drug or service was not properly rendered by the pharmacy or
298	298	10.6pharmacist; or
299	299	10.7 (2) technical billing error.
300	300	10.8 Sec. 11. [62W.16] SPREAD PRICING PROHIBITION.
301	301	10.9 A pharmacy benefit manager is prohibited from engaging in spread pricing in this state.
302	302	10.10Sec. 12. APPROPRIATION.
303	303	10.11 $....... in fiscal year 2026 and $....... in fiscal year 2027 are appropriated from the general
304	304	10.12fund to the commissioner of commerce to increase staff for the exclusive purposes of
305	305	10.13investigation and enforcement of pharmacy benefit managers under Minnesota Statutes,
306	306	10.14chapter 62W. The base for this appropriation is $....... in fiscal year 2028.
307	307	10Sec. 12.
308	308	REVISOR SGS/AC 25-0471503/14/25