Independent pharmacies welcome legislation targeting drug middlemen
The legislation would create a single state-run pharmacy benefit manager to negotiate drug prices for Medicaid plans.
Independent pharmacies often lose money on prescriptions because drug middlemen do not always reimburse them.
The changes would take effect in 2027.
(FOX 9) - Independent pharmacies applauded legislation that is awaiting the governor's signature, saying it would help them stay afloat as many of them struggle to survive.
What we know
Legislation awaiting Governor Tim Walz' signature would create a state-run pharmacy benefit manager, which would negotiate drug prices for Medicaid plans. The goal is to simplify the process, which now involves multiple pharmacy benefit managers, and increase transparency.
The legislation would also require the state-run group to report prices, rebates and discounts to a state commissioner. Under the legislation, a single pharmacy benefit manager overseen by the state would be required to pay independent pharmacies for each prescription they fill.
That requirement would take effect in 2027.
In the meantime, the state would pay pharmacies a flat fee of $4.50 per prescription to keep them afloat.
The backstory
Pharmacy benefit managers, or PBMs, negotiate drug prices for insurance plans. Many of them are owned by insurance companies.
Within the last year, the Federal Trade Commission has investigated pharmacy benefit managers. It released two scathing reports, accusing them of unfair business practices.
What they're saying
"You're paying the pharmacies better, pharmacies stay open, patients have choice where they get their care..." said pharmacist John Hoeschen, owner of St. Paul Corner Drug. "If you're losing $35, $40, $50, $55, $60, $70 dollars a prescription, what else can you sell to make that up? You can't. That's an unsustainable model. That is not a recipe for longevity in this business."
Dig deeper
Mark Cuban, the billionaire investor who has criticized pharmacy benefit managers and who started his own company to sell prescriptions at affordable rates, said the legislation in Minnesota does not do enough. In a post on X on Sunday, Cuban said "all it is doing is saying you want more details but keep doing business the way your PBMs always have.... They will just move things around to different places."
What's next
The legislation is awaiting the governor's signature.
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