HF3708

Purpose

Adds a formal process to evaluate whether the state’s pharmacy benefits manager (PBM) contract delivers expected savings. It sets up a comparison between actual costs under the current PBM (the contract starting January 1, 2023) and projected costs under the PBM contract that was in place from 2018 to 2022, then uses the results to decide how to procure the next PBM contract.

Main Provisions

• Establishes a report savings determination process for selecting a successor PBM.
• The Commissioner of Management and Budget (MMB), with an actuarial consultant, must compare:
  • Actual electronically adjudicated prescription drug costs from the first two years of the 2023 PBM contract.
  • A projection of what those costs would have been under the 2018–2022 PBM contract, adjusted for formulary changes and beneficiary use.
• The projection must use industry-recognized data sources.
• The MMB must report the comparison results to the Legislative Auditor and to the chairs and ranking minority members of the relevant Senate and House committees by March 1, 2025.
• The actuarial consultant must take steps to prevent conflicts of interest.
• By April 1, 2025, the Legislative Auditor shall provide a report to the MMB and the chairs and ranking members, assessing whether the MMB’s comparison was done correctly.
• The technology platform vendor must supply the electronically adjudicated prescription drug data and any needed support to prepare and validate the report. Personal data involved is treated as private data.
• If the MMB determines that savings were not achieved, it may skip using a reverse auction for choosing the next PBM contract.
• If savings were achieved, the next PBM contract must be selected using the reverse auction process described in this section.
• If the comparison shows no savings, the MMB’s report must include findings, analysis of what caused the shortfall, and recommendations to achieve savings in the next contract.
• If the comparison is inconclusive, the MMB may skip the reverse auction for the next PBM contract.

Process and Timeline

• Key steps and obligations occur between 2023 and 2025, with specific reporting deadlines:
  • March 1, 2025: MMB-to-Legislative Auditor and committee chairs/minority members report the comparison results.
  • April 1, 2025: Legislative Auditor submits a verification report about the comparison.
• The decision to use or skip a reverse auction depends on the findings of the comparison.

Roles and Entities Involved

• Commissioner of Management and Budget (MMB): Leads the savings comparison and procurement decisions.
• Actuarial consultant: Assists with the cost comparison and verifies credibility and lack of conflicts.
• Legislative Auditor: Reviews the MMB’s comparison and reports findings.
• Technology platform vendor: Provides the necessary data and support for analysis.
• PBM (pharmacy benefit manager): The contractor being evaluated and potentially replaced.

Data Privacy and Security

• Personal data from the platform vendor is treated as private data, with protections consistent with the state’s privacy laws.

Changes to Law

• Amends Minnesota Statutes 2024 section 43A.231, subdivision 5, to add the formal “Report savings determination process for selecting successor pharmacy benefit manager” and the associated requirements.

Expected Impact

• Creates a transparent, data-driven process to determine whether the state’s PBM provides expected savings.
• Clarifies when a reverse auction must or must not be used for selecting a new PBM.
• Introduces independent verification by the Legislative Auditor to ensure accuracy of savings analyses.

Relevant Terms pharmacy benefit manager, PBM, reverse auction, Commissioner of Management and Budget, actuarial consultant, legislative auditor, electronically adjudicated prescription drug costs, industry-recognized data sources, formulary, beneficiary utilization changes, contract, successor PBM contract, 2018–2022 contract, 2023 contract, March 1, 2025, April 1, 2025, conflict of interest, technology platform vendor, private data on individuals, savings determination, procurement, report, findings, recommendations.