HF3931 (Legislative Session 94 (2025-2026))
Use of spread pricing by pharmacy benefit managers prohibited, license application fees increased, permissible sources of income limited, fiduciary duties imposed, and money appropriated.
Related bill: SF4062
AI Generated Summary
Purpose
- This bill aims to regulate pharmacy benefit managers (PBMs) in Minnesota. It seeks to increase transparency, prohibit or limit certain PBM practices, strengthen protections for health plans and patients, and create clearer licensing and enforcement rules for PBMs operating in the state.
Key Definitions and Scope
- The bill adds and clarifies terms used for PBMs and their operations, including what counts as a “pharmacy benefit management fee,” what constitutes “rebates,” and what is considered “spread pricing.” It also covers how PBMs interact with health carriers, plan sponsors, and pharmacies.
Main Provisions
Licensing and Fees
- PBMs must apply for a license with the commissioner of commerce. The application requires basic information about the PBM, its leadership, and its organization.
- Initial license fee is set (with a per-year renewal). Licenses last one year and must be renewed.
- The commissioner may request additional information during licensing and renewal, and can deny, or require a corrective action plan if there are deficiencies.
Prohibition of Spread Pricing and Other Income Rules
- Spread pricing is prohibited. This means the price charged to a health plan for a drug cannot differ from what is paid to the pharmacist for services.
- PBMs may not derive income from activities beyond the defined PBM fee. They must disclose the amount and types of fees to the health carrier.
- PBMs cannot charge fees related to adjudication of a claim or related claims-processing services.
- PBMs must not reimburse or pay pharmacies less or differently for the same drug based on ownership relationships or other conflicts.
Fiduciary Duty, Conflicts of Interest, and Good Faith
- PBMs have a fiduciary duty to health carriers and must act in good faith and with fair dealing.
- PBMs must disclose conflicts of interest that could affect duties to health carriers.
Prohibited Standards and Practices
- PBMs cannot require pharmacy accreditation or certification standards that are more stringent than or add to those set by the Board of Pharmacy or this chapter.
- PBMs cannot impose network or pricing practices that discriminate against or penalize enrollees based on ownership relationships with pharmacies.
Rebate and Pricing Rules
- Rebates are defined as price concessions from drug manufacturers to PBMs or plan sponsors (including discounts tied to utilization or value-based contracts). Rebates are not the same as the PBM management fee.
- The bill limits how PBMs can use and retain rebates; they must be disclosed to health carriers, and some retained rebates/fees must be passed through or appropriately disclosed.
Maximum Allowable Cost (MAC) Pricing and Disputes
- PBMs must use MAC pricing and provide to network pharmacies a clear MAC price list at the start of every contract or renewal.
- MAC lists must be updated frequently (including after significant cost increases) and communicated in a timely, accessible way.
- Contracts must include a process to appeal MAC prices, with timeframes for filing, investigation, and resolution. If an appeal is upheld, the price must be adjusted.
340B and Network Participation
- The bill restricts certain practices around 340B entities and requires non-discriminatory treatment for 340B drugs within PBM networks. It also prevents rebates or reimbursements from treating 340B differently than non-340B drugs when applicable.
Price and Payment Protections for Pharmacies
- PBMs cannot reduce payments to pharmacies in a way that undermines proper reimbursement for drugs or services.
- The bill prohibits paying below pharmacy acquisition cost or below the cost used for the same drug elsewhere in the network.
- If MAC disputes arise, pharmacies may appeal and seek adjustments; if an appeal is denied, the PBM must provide the reason and related supplier information.
Transparency and Reporting
- Beginning in a prior year and annually thereafter, PBMs must file a transparency report with the commissioner. The report includes:
- Aggregate drug costs before rebates and fees.
- Aggregate rebates received from manufacturers.
- All fees received from all sources.
- Retained rebates/fees not passed through to plan sponsors.
- Aggregate retained rebate/fee percentages.
- Deidentified claims-level data about drug, quantity, prior authorization, patient cost-sharing, payments to pharmacies, and any spread between amounts paid to the pharmacy and charged to the plan sponsor.
- The commissioner will publish the reports on the Department of Commerce website, omitting identifying information about plan sponsors and specific drugs, while keeping data useful for oversight.
- Some data is treated as confidential or protected nonpublic, especially details that could reveal trade secrets.
- The commissioner may request related information from the health department or other agencies to support enforcement actions.
Network Service Area and Licenses
- PBMs must establish a pharmacy network service area consistent with existing Minnesota rules for every network reviewed under this section.
Retroactive Adjustments
- PBMs may not retroactively adjust, deny, or reduce a claim unless it’s tied to specific circumstances like fraud, incorrect original payment, or a technical billing error identified in a pharmacy audit.
Appropriations for Enforcement
- In fiscal year 2027, general-fund money is appropriated to increase staff for the exclusive purposes of investigating and enforcing PBM-related provisions of Minnesota law, with the base level noted for 2028 onwards.
Changes to Existing Law
- The bill makes numerous amendments to Minnesota Statutes 2024 sections 62W.02, 62W.03, 62W.04, 62W.05, 62W.06, 62W.07, 62W.08, and 62W.13 to implement these provisions and align enforcement, reporting, and pricing practices with the new rules.
Significant Changes vs. Current Law
- Establishes a formal, state-level licensing framework for PBMs (instead of leaving licensing vague or optional).
- Makes spread pricing illegal in Minnesota and sets clear rules about PBM pricing, fees, and income.
- Introduces fiduciary duties and explicit conflict-of-interest disclosures for PBMs.
- Requires comprehensive MAC pricing transparency and a formal MAC dispute/appeal process with timelines.
- Expands transparency requirements with annual public reporting, including detailed, deidentified claim data.
- Tightens controls around rebates, discounts, and how PBMs can retain or pass through savings to plan sponsors.
- Strengthens enforcement tools, penalties, and funding for ongoing oversight.
Implications for Stakeholders
- PBMs: Must adjust business practices to comply with licensing, pricing, disclosure, and reporting requirements; potential changes to revenue models and fee structures.
- Health carriers and plan sponsors: Gain more visibility into pricing, rebates, and network costs; improved protections against certain PBM practices; new reporting and audit requirements.
- Pharmacies: Access to MAC pricing information; ability to appeal pricing decisions; protections against unpredictable price reductions or below-cost payments.
- Patients/enrollees: Potentially more stable drug pricing and more transparency about how pharmacy costs are set, though changes will depend on implementation.
Implementation and Oversight
- Licensing and enforcement are handled by the Minnesota Department of Commerce (with support from other agencies as needed).
- Penalties include per-day fines and per-violation fines, and funds go to the state general fund.
- A funding increase in 2027 is provided to boost enforcement capability.
Summary of Intent
- Overall, the bill seeks to curb certain PBM practices, improve transparency, ensure fair pricing and network access, and strengthen state oversight of PBMs to protect health plans, pharmacies, and patients in Minnesota.
Relevant Terms - pharmacy benefit manager (PBM) - spread pricing - pharmacy benefit management fee - rebates - maximum allowable cost (MAC) pricing - MAC price list - deidentified claims data - plan sponsor - health carrier - network adequacy report - conflicts of interest - fiduciary duty - good faith and fair dealing - preferred/contracted pharmacies - 340B Drug Pricing Program - claim adjudication fee - network service area - retroactive adjustments - compliance penalties (per day and per violation) - transparency report - commissioner of commerce - licensure and renewal - license fees - enforcement funding
Bill text versions
- Introduction PDF PDF file
Actions
| Date | Chamber | Where | Type | Name | Committee Name |
|---|---|---|---|---|---|
| March 05, 2026 | House | Action | Introduction and first reading, referred to | Health Finance and Policy |
Citations
[
{
"analysis": {
"added": [
"Defines a pharmacy benefit management fee as a flat defined dollar-amount fee covering PBM services.",
"Requires the fee not to exceed the bona fide value of the itemized services actually performed.",
"Requires the value of the service to be based on the value to the health carrier/plan.",
"Prohibits the PBM fee from being directly or indirectly based on or contingent upon: (1) price of prescription drugs (rebates/discounts/other price concessions), (2) savings or rebates retained by the PBM, (3) premiums, deductibles, or other cost-sharing, (4) coverage/formulary decisions or referrals, or (5) any other amounts or methodologies defined by the commissioner."
],
"removed": [],
"summary": "Adds Subd.14a to 62W.02 defining a Pharmacy Benefit Management Fee.",
"modified": []
},
"citation": "62W.02",
"subdivision": "Subd.14a"
},
{
"analysis": {
"added": [
"Rebates are defined as all price concessions paid by a drug manufacturer to a PBM or plan sponsor, including discounts and other price concessions based on utilization."
],
"removed": [],
"summary": "Rebates subsection amended to clarify Rebates.",
"modified": [
" Rebates also include price concessions based on the effectiveness of a prescription drug in a value-based or performance-based contract."
]
},
"citation": "62W.02",
"subdivision": "Subd.17"
},
{
"analysis": {
"added": [
"Spread pricing is defined as a model where a PBM charges a health plan a contracted price for prescription drugs that differs from the amount the PBM pays the pharmacist or pharmacy for those drugs/services."
],
"removed": [],
"summary": "Adds Subd.21 defining Spread pricing.",
"modified": []
},
"citation": "62W.02",
"subdivision": "Subd.21"
},
{
"analysis": {
"added": [
"Application to license must be to the commissioner of commerce on a form prescribed by the commissioner.",
"Must include: name, address, phone; agent for service of process; qualifications of individuals responsible for affairs; board/officials of the entity."
],
"removed": [],
"summary": "Licensure: Application requirements and fees for PBMs.",
"modified": [
"Also requires a nonrefundable fee (appears to be 8500) and references a process timetable including review within 90 days after a completed application."
]
},
"citation": "62W.03",
"subdivision": "Subd.2"
},
{
"analysis": {
"added": [
"License is valid for one year."
],
"removed": [],
"summary": "Renewal of PBM license.",
"modified": [
"Renewal requires a completed application, network adequacy report, and a renewal fee (listed as 8500).",
"Late renewal adds a late fee; commissioner may deny renewal for specified reasons or allow a corrective action plan."
]
},
"citation": "62W.03",
"subdivision": "Subd.3"
},
{
"analysis": {
"added": [
"Penalties for acting without a license, including daily fines."
],
"removed": [],
"summary": "Penalties for unlicensed activity and other violations.",
"modified": [
"Cap on penalties described (up to a stated amount per violation; per-day fines) and funds deposited to the general fund."
]
},
"citation": "62W.03",
"subdivision": "Subd.5"
},
{
"analysis": {
"added": [
"PBM must exercise good faith and fair dealing; contracts cannot waive this obligation."
],
"removed": [],
"summary": "Good faith and fair dealing obligations.",
"modified": []
},
"citation": "62W.04",
"subdivision": "Subd.1"
},
{
"analysis": {
"added": [
"PBM must notify health carriers in writing of any activity or practice that presents a conflict of interest."
],
"removed": [],
"summary": "Conflict of interest disclosures.",
"modified": []
},
"citation": "62W.04",
"subdivision": "Subd.2"
},
{
"analysis": {
"added": [
"PBM has a fiduciary duty to the health carrier and must discharge it in accordance with state and federal law."
],
"removed": [],
"summary": "Fiduciary duties.",
"modified": []
},
"citation": "62W.04",
"subdivision": "Subd.3"
},
{
"analysis": {
"added": [
"PBMs must perform their duties with care, skill, prudence, diligence, and professionalism."
],
"removed": [],
"summary": "Performance standards.",
"modified": []
},
"citation": "62W.04",
"subdivision": "Subd.4"
},
{
"analysis": {
"added": [
"PBMs must not charge a pharmacy a fee related to adjudication of a claim or other specified fees.",
"PBMs must not derive income from PBM services except for a PBM management fee, and must disclose the amount and types of PBM fees."
],
"removed": [],
"summary": "Prohibited fees and income.",
"modified": []
},
"citation": "62W.04",
"subdivision": "Subd.5"
},
{
"analysis": {
"added": [
"PBMs must not require accreditation standards or certification requirements that are more stringent than or in addition to standards set by the Board of Pharmacy or as permitted under this chapter."
],
"removed": [],
"summary": "Prohibited accreditation standards.",
"modified": []
},
"citation": "62W.04",
"subdivision": "Subd.6"
},
{
"analysis": {
"added": [
"Explicit prohibition on spread pricing in Minnesota."
],
"removed": [],
"summary": "Spread pricing prohibited.",
"modified": []
},
"citation": "62W.04",
"subdivision": "Subd.7"
},
{
"analysis": {
"added": [
"PBMs must not pay or reimburse for ingredient drug components less than the national average drug acquisition cost or, if unavailable, the wholesale acquisition cost."
],
"removed": [],
"summary": "Ingredient drug product component reimbursement limits.",
"modified": []
},
"citation": "62W.04",
"subdivision": "Subd.8"
},
{
"analysis": {
"added": [
"PBMs must not reduce payments to pharmacies through reconciliation or other means below agreed reimbursement rates."
],
"removed": [],
"summary": "Reimbursement reductions prohibited.",
"modified": []
},
"citation": "62W.04",
"subdivision": "Subd.9"
},
{
"analysis": {
"added": [
"PBMs must establish a network service area consistent with 62K.13 for every network subject to review."
],
"removed": [],
"summary": "Network service area requirements.",
"modified": []
},
"citation": "62W.05",
"subdivision": "Subd.4"
},
{
"analysis": {
"added": [
"Annual transparency reports due; must include aggregate costs, rebates, fees, and deidentified claims data; data categorized with specific fields."
],
"removed": [],
"summary": "Transparency report requirements.",
"modified": [
"Includes protections for confidential data; data not publicly disclosed in a way that reveals plan sponsors or drugs; data can be used in enforcement."
]
},
"citation": "62W.06",
"subdivision": "Subd.2"
},
{
"analysis": {
"added": [
"PBM with ownership in a pharmacy must disclose the difference between amounts paid to that pharmacy and charged to the plan sponsor."
],
"removed": [],
"summary": "Ownership disclosures.",
"modified": []
},
"citation": "62W.07",
"subdivision": "Subd.1"
},
{
"analysis": {
"added": [
"Prohibits penalties or financial incentives encouraging use of affiliated pharmacies; allows same incentives if no ownership exists and pricing terms are the same."
],
"removed": [],
"summary": "Enrollee financial incentives for affiliates prohibited.",
"modified": []
},
"citation": "62W.07",
"subdivision": "Subd.2"
},
{
"analysis": {
"added": [
"Prohibits limits based on ownership status; allows differential limits only if the enrollee can still access options (e.g., mail order vs. retail) with equivalent terms where ownership is not held."
],
"removed": [],
"summary": "Enrollee limits on medication access for nonaffiliates.",
"modified": []
},
"citation": "62W.07",
"subdivision": "Subd.3"
},
{
"analysis": {
"added": [
"Prohibits PBMs/health carriers from restricting 340B entities from participating in provider networks; prohibits reimbursement differences for those entities."
],
"removed": [],
"summary": "340B entity participation limits.",
"modified": []
},
"citation": "62W.07",
"subdivision": "Subd.4"
},
{
"analysis": {
"added": [
"Prohibits reimbursement practices that disadvantage 340B entities or pharmacies; requires consistency with other similarly situated pharmacies."
],
"removed": [],
"summary": "Reimbursement practices for 340B entities.",
"modified": []
},
"citation": "62W.07",
"subdivision": "Subd.5"
},
{
"analysis": {
"added": [
"PBMs must provide MAC pricing sources at contract start; update price lists at least every seven business days; notify changes within seven calendar days under specified triggers."
],
"removed": [],
"summary": "Maximum Allowable Cost (MAC) pricing processes.",
"modified": [
"Requires prompt price review formats for network pharmacies; maintain a process to remove drugs from MAC pricing; ensure MAC lists are not set below acquisition costs and disclose sources."
]
},
"citation": "62W.08",
"subdivision": "Subd.1"
},
{
"analysis": {
"added": [
"No PBM shall retroactively adjust, deny, or reduce a claim unless resulting from a PBM audit under section 62W.09, with specified exceptions (fraud, improper payment, technical billing error)."
],
"removed": [],
"summary": "Retroactive adjustments.",
"modified": []
},
"citation": "62W.13",
"subdivision": "Subd.1"
},
{
"analysis": {
"added": [
"Not explicitly defined here, but referenced as the basis for permitted retroactive adjustments."
],
"removed": [],
"summary": "Audit procedures referenced in 62W.13.",
"modified": []
},
"citation": "62W.09",
"subdivision": ""
},
{
"analysis": {
"added": [
"Permits a request for information from the commissioner of health; information may be used in enforcement actions."
],
"removed": [],
"summary": "Health department data requests for enforcement.",
"modified": []
},
"citation": "62J.84",
"subdivision": "Subd.12"
},
{
"analysis": {
"added": [
"PBMs must align their network service areas consistent with 62K.13 for networks subject to review."
],
"removed": [],
"summary": "Network service area alignment with 62K.13.",
"modified": []
},
"citation": "62K.13",
"subdivision": ""
},
{
"analysis": {
"added": [
"References to trade secret information and confidentiality in relation to the transparency data."
],
"removed": [],
"summary": "Confidentiality for data disclosed to the commissioner.",
"modified": []
},
"citation": "13.37",
"subdivision": ""
},
{
"analysis": {
"added": [
"PBMs/health carriers prohibited from restricting 340B entities from participating in networks; pricing and reimbursement parity relative to non-340B entities."
],
"removed": [],
"summary": "Federal 340B Drug Pricing Program reference.",
"modified": []
},
"citation": "42 U.S.C. § 256b",
"subdivision": ""
}
]Progress through the legislative process
In Committee