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Bill Aimed At Curbing Prescription Drug Costs Advances

A bill that its authors say will save Montanans up to $8 million in prescription drug costs continues to advance in the Legislature.  

On Wednesday, the Senate voted 37-13 in favor of Senate Bill 71, sending it to the House for consideration. If the measure passes the House, it could only be stopped by the governor’s veto.

SB 71, written by State Auditor Matt Rosendale’s office, was first presented during a hearing Feb. 1 before the Senate Business and Labor Committee.

The bill’s sponsor, senator and orthopedic surgeon Dr. Al Olszewski, R-Kalispell, told the committee that Montana could lead the way in a nationwide movement to bring down prescription prices.

 “If it works here – may I say, when it works here – we may be the start of something in the country,” Olszewski testified. That committee advanced the bill on a 6-4 vote along party lines.

With SB 71, Rosendale and his staff aim to rein in what they believe is a major reason behind high prescription drug costs for individuals: pharmacy benefit managers (PBMs), the third-party administrators between insurance companies and consumers.

But instead of targeting PBMs, SB 71 would go after insurance companies.

Efforts by other states to reduce prescription drug costs have largely failed because they directly targeted PBMs with laws that were struck down in court because of conflicts with federal statutes, according to Rosendale’s office. 

Montana’s approach puts responsibility in the hands of insurance companies, and that’s unique in the nation.

“The approach that our team developed here at the auditor’s office (largely modeled after Montana’s success at the State Health Plan) is being seriously looked at throughout the nation, including in Maine and Texas, and by members of Congress (including more than just Montana’s delegation),” Rosendale’s media spokesperson said this week.

Kris Hansen, chief legal counsel for the auditor’s office and a former Hi-Line legislator, believes SB 71 can survive a lawsuit from the pharmaceutical industry. 

SB 71 would apply only to the individual drug market.

Rosendale likened the twisting path a drug travels on its way from the manufacturer to the consumer to that of a computer circuit board.

The bill aims to reform the way health insurance companies contract with PBMs, with the goal of eliminating pricing schemes and reducing health care costs.

Here’s how:

·        By doing away with “spread pricing,” which is when a PBM charges an insurance company significantly more for a prescription, reimburses the pharmacy, and pockets the difference, thereby increasing the insurance cost.

·        By requiring that all rebates, or “kickbacks,” as some of its proponents call them, from drug manufacturers be returned to the insurance company to reduce consumers’ premiums or out-of-pocket costs instead of being retained by the PBM.

·        By making additional changes to eliminate conflicts of interest when deciding which drugs are covered by insurance and given preferred status.

SB 71’s opponents disagree with the authors and advocates about the bill’s potential benefits.

A point made repeatedly by opponents, five of whom spoke at the Feb. 1 hearing, is that SB 71 is unnecessary because the law already allows insurance companies to contract with PBMs in ways that don’t include the practices Rosendale’s team deems hurtful. 

Some opponents also doubt that the bill would do what it’s meant to do, especially whether it would save consumers money. And throughout the hearing, opponents defended some of the practices SB 71 would ban, saying they allow for contractual flexibility or price consistency.

Here is how state senators voted on SB 71.

Further reading on SB 71: Will Montana Pass A Bill That Could Save $7 Million In Drug Costs & Set The Course For Reform In The Nation?

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