State lawmakers are looking to make prescription medications more affordable with multiple bills moving through the state legislature to simplify the complicated supply chain behind pharmacies. 

More than 42,000 drug products had price increases between 2022 and 2023, according to the Department of Labor, with an average increase in manufacturer prices being around 15%. 

U.S. consumers spent around $406 billion on retail prescription drugs in 2022, which is more than $100 billion more than they did in 2014, according to the National Health Expenditure Accounts. 

Rep. Steve Elkins (DFL-Bloomington), who chief authored three bills aiming to make prescription drugs more affordable, said his ultimate goal is to chip away at the convoluted, dysfunctional pricing system behind prescription drugs. 

“If you look through the literature, some of the worst examples of this dysfunction are related to insulin, which is a drug that people need to live,” Elkins said. 

Prescription drugs are seeing inflated costs because, in part, third-party groups called Pharmacy Benefit Managers give benefits for health plans to insurance plans, employers and government programs to try to negotiate costs through rebates and discounts, Elkins said. 

Because of this system and current federal laws, PBMs and other groups can negotiate the price of prescription drugs with health insurers and pocket the difference while leaving consumers with a larger bill, Elkins said. This phenomenon, called spread pricing, is targeted in one of his bills, HF2851.

Elkins said his bills target this process, as well as rebates given by drug manufacturers to PBMs, in hopes of simplifying the process to lower costs.

“They are going after the big rebates because, for the most part, the rebates get passed on to the plans, and to a large degree, it’s the plans themselves that are driving the PBMs to choose drugs for the formularies that will provide bigger rebates rather than lower prices,” Elkins said. “That’s the part that really is perverted to me.” 

Under this system and current federal laws, PBMs and other groups can negotiate the price of prescription drugs with health insurers and pocket the difference while leaving consumers with a larger bill, Elkins said. This phenomenon, called spread pricing, is targeted in one of his bills, HF2851. 

Michael Murphy, American Pharmacists Association senior advisor for state government affairs, said that because everything gets paid through insurance in pharmaceutical companies, the process becomes more complicated and removed from the patient. 

“Oftentimes, because it’s such a complicated process, health insurers subcontract out the drug benefit to organizations known as pharmacy benefits,” Murphy said. 

One of the bills, HF1652, which Elkins authored, ensures that a health plan cannot force patients to switch drugs in the middle of a year because a health insurer wants a pricier drug to get a higher rebate. The second bill, HF1075, targets health plans and PBMs to use rebates to buy down the prices patients pay at the pharmacy. 

“Because so much revenue is generated by a relatively small percentage of their health plan members who need these drugs, but they are making a conscious decision to use those revenues to buy down the premiums rather than buying down the price of the drugs for the people who have to take them,” Elkins said. 

The fourth bill, HF1076, requires health plans to list all low- and high-priced drugs in the consumer’s bill and that the lowest-priced drugs take precedence for patients. According to Elkins, a strategy like this has not been used in any other state.

“As a state legislator, I know that so many of these problems are the result of well-meaning but misguided decisions that were made, either in Congress or by the Centers for Medicare and Medicaid Services,” Elkins said. “Some cases 20, 30 years ago, and they were just spun out of control.”

Due to PBMs setting reimbursement prices for medications to gain higher rebates, Murphy said the pharmaceutical industry is forced to dispense medications at a loss, which often creates communities with limited pharmacy options across the country. 

“It can be concerning when we see misaligned incentives coming from some of these external organizations that put handcuffs on how pharmacists can best provide care to their patients,” Murphy said.

College of Pharmacy professor Sarah Westberg said it is necessary to support pharmacies alongside patients because of the specialized care they offer to people, such as ensuring effective and safe medications. Westberg added that pharmacists connect patients with the prescriber, which is a connection that could be lost if pharmacies are not well supported. 

“If you lose that frontline pharmacist, you lose a lot of access,” Westberg said. 

Westberg said most pharmacists want what is best for patients and to make sure their services stay accessible. She added that although the system is complicated, all parts of the system, such as PMBs, bring value by negotiating prices and more. 

“They bring value in terms of helping to negotiate prices. They bring value in helping to make sure that when certain medications are used, they are the most appropriate through prior authorizations,” Westberg said. 

Murphy said it is important for state and federal lawmakers to consult with health care providers who have intimate knowledge about the dysfunctional medication system to ensure new legislation supports patients

“What’s really concerning for me as a health care provider is that when a patient is going to the pharmacy to pick up their prescription and they’re faced with a cost that they can’t deal with, that’s someone’s mom,” Murphy said. “That’s someone’s son. That’s someone who is trying to navigate what is likely a very foreign, complicated system, and they need someone that can be there as an advocate for them to help them navigate that system.”

Other bills targeting the prescription drug system include requiring a PBM to enter into a contract with the Minnesota commissioner of human services, another one simplifying how payments are dispensed to improve access to pharmacies and another bill moving through the state legislature that would require health plans to pay a dispensing fee to certain pharmacies. 

At the end of the day, these bills are meant to keep health care affordable for residents and support local pharmacies.

“Pharmacies aren’t looking to make huge profits,” Westberg said. “They just want to cover their costs and stay open to take care of patients. And right now, that’s tough.”