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MI’s First Pharmaceutical ‘Middlemen’ Mandates Signed

February 28, 2022

After countless meetings and assessments on the state’s ascending drug costs, the Governor signed legislation Wednesday reining in on how pharmacy benefit managers (PBMs) absorb revenue from patients needing their medicine. 

“This bipartisan legislation will improve transparency and ensure that we’ve got fair drug pricing. It will ensure Michiganders will have access to all the information about the back-end cost and profit of their prescription medication, and this will help lower inflated prices,” said Gov. Gretchen Whitmer at Wednesday’s press conference. 

Wednesday, Whitmer signed HB 4348 by Rep. Julie Calley (R-Portland) at a Meijer grocery store and pharmacy located on Saginaw Highway in Lansing. 

The Governor was joined by Calley; Nancy Courtney, a registered nurse and volunteer at the Detroit Area Agency on Aging and St. Frances Cabrini Clinic in Detroit; Rep. Angela Witwer (D-Delta Township); and Meijer President Rick Keyes. 

“HB 4348 focuses on the transparency of prescription drug pricing and reimbursement, which benefits our customers by providing them with high quality medication at a low cost,” Keyes said. “It will truly have a powerful impact on patients across the state of Michigan.” 

Calley’s legislation would mandate PBMs to be licensed with the state’s Department of Insurance and Financial Services, which would subject them to yearly transparency reports and renewal applications, fees and network adequacy reports.

The reform also bans clawbacks, with Calley describing the occurrence as a pharmacy charging a person $30 for a $15 medication. Because of the pharmacy’s contract with a PBM, they can’t tell the individual what the unaltered cost of their prescription drug is, and the additional $15 made off of the transaction goes back to the PBM. 

“This bill is one of the most assertive in the nation, and it takes great strides in protecting Michiganders,” Calley said. “We don’t want people to have to decide between life-saving medication and the mortgage payment or their utility bill or their food bill.” 

In December 2020, the Governor’s Prescription Drug Task Force published that PBMs — the nicknamed “middlemen” of the dispersal chain for prescription drugs — control large-scale drug formularies. This allows them to hold onto a number of manufacturer rebates. 

Overall, PBMs have been accused of profiting off of unspoken incentives, like spread pricing where they keep the difference of charging a health plan sponsor a greater price tag for a product than what they will compensate the pharmacy with. 

They can also spearhead contracts or ownership over pharmacies to bar them from opting to disclose drug costs — both the original price of a drug and the competitive costs of less expensive generic options. 

Witwer, a member of the Governor’s task force, said she’s knocked more than 100,000 doors since before she was elected. She consistently hears how prescription drug costs for individuals and their family members was either their first or second greatest concern. 

“Last year, I knocked on the door of a person who had MS (multiple sclerosis). She couldn’t make her mortgage payment if she bought her medications. So she had to skip her medications for MS,” Witwer said. “As we gather here at Meijer, I’m especially reminded that many Michigan residents, our seniors and our most vulnerable, have to choose between food and their critical medications.” 

In addition the Governor signed HB 4351 by Rep. Karen Whitsett (D-Detroit) and HB 4352 by Rep. Sue Allor (R-Wolverine)to: 

  • Prohibit PBMs from charging pharmacies differently based on whether or not one is a 340B entity, meaning they can be flexible with federal resources and provide to more eligible patients. 
  • Ban PBMs from obligating a patient to pay a copay that was greater than the selling cost of the drug distributed to them. 
  • Ban pharmacies from participating in contracts that bar them from disclosing prescription drug costs and the price tags of similar products.

“In 2017, 32% of Michigan residents stopped taking medication as prescribed, according to the cost,” Calley said. “Think of what we can save if people could take their medication as prescribed – less emergency room visits, less hospital stays, overall care savings.” 

Calley also said she would be remiss if she didn’t highlight House Speaker Jason Wentworth (R-Farwell)’sefforts in moving the legislation forward, adding that he prioritized making health care affordable, accessible and of high quality early in 2021.

Also Wednesday, the Governor signed

HB 4149 and HB 4151 to make it a civil infraction, instead of a misdemeanor, to not present a hunting or fishing license, as well as when fishing without attaching a name and address to tip-ups or fishing with too many lines. 

HB 5062 allowing the Michigan Liquor Control Commission to issue an on-premises license to a recently constructed business located in a development area or district.  HB 5260 satisfying pre-licensure Michigan vehicle dealer requirements to be fulfilled with a training program conducted by the Secretary of State or an approved trade organization.

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