HELENA — Of the scores of bills reaching Gov. Steve Bullock’s desk this week, a bill meant to reduce the cost of prescription drugs is being lobbied by both sides: Supporters, who are hoping the governor signs it, and health insurers and drug-benefit managers, who want him to veto it.
Senate Bill 71, developed by Republican state Auditor Matt Rosendale, takes aim at pharmacy-benefit managers (PBMs), the billion-dollar companies that insurers hire to “manage” drug benefits.
The bill requires insurers to enforce contracts that would modify what Rosendale says are PBM practices used to inflate the cost of drugs, such as “spread pricing” and rebates paid to PBMs by drug manufacturers to give preference to their drug.
“The insurance companies have a fiduciary responsibility to their customers, and they contract with these PBMs,” Rosendale told MTN News this week. “Now they have to make sure that those contracts direct all of those additional revenue sources directly back, so that the consumer gets the benefit.”
Actually, they would “have to make sure” only if SB71 becomes law — and health insurers and PBMs are trying to prevent that from happening.
They’ve sent letters to Bullock, asking him to veto the bill.
SB71 reached Bullock’s desk on Monday; he has 10 days to sign it into law, veto it, or let it become law without his signature. It passed the Legislature by relatively wide margins — 71-27 in the House and 37-13 in the Senate. Most of the “no” votes came from Democrats.
So far, Bullock, a Democrat, has given no indication what he plans to do. When asked about the bill last week, he gave his stock answer about bills headed to his desk: “I’ll take a close look at them, as I will every bill.”
The Montana Health Co-op, one of the smaller health insurers in Montana, opposed SB71 and sent a letter to Bullock late last month asking him to veto it.
The nonprofit insurer said the bill would significantly increase administrative costs for the company and could prevent any rebates from being paid on its customers’ drugs at all.
“We have communicated to the governor’s office that this bill will have the opposite of its intended effect,” said Richard Miltenberger, CEO for the Health Co-op. “It will raise costs, now lower them. Our members already have the fully transparent, pass-through drug purchasing system the law is trying to achieve.”
Lobby groups representing health insurers and pharmacy-benefit managers also have sent letters to Bullock, asking him to veto SB71.
The PBM group said if there’s no incentive for drug manufacturers to compete for inclusion on a preferred list — by offering rebates — prices will increase.
Rosendale maintains that PBMs are a major reason for inflated drug prices, and that SB71 is a way to stop some of their practices, or direct the benefits to consumers, rather than the PBMs’ pocket.
“What we found was that the path for a medication, from the manufacturer to the actual consumer’s mouth, is as complex as the schematic of a laptop (computer),” he said. “All of these hands, that it passes through, make money along the way.”
The bill, if signed, wouldn’t take effect until next year, as Rosendale’s office would have to implement it this year. But he said he estimates it could save consumers buying coverage on the individual market $7.5 million to $8 million a year.
“We’ve seen the statements that the governor has come out with, that he is focused on reducing the cost of prescription drugs,” Rosendale said. “So, we have no reason to believe that we would not sign this, based on the bipartisan support we’ve been able to get throughout the session.”
