The centuries-old expression "Hobson's choice" indicates that one has to take or leave something offered. In other words, it might not even be a real choice.
As policymakers from opposing sides of the aisle who often disagree, we're both big fans of policies that provide options that benefit Minnesota. This is particularly true when it comes to addressing rising health care costs and getting the best possible deal on prescription drug benefits for Minnesota state employees and taxpayers.
So here's an idea: What if we could dramatically reduce what the state spends on prescription drugs without cutting benefits?
It could happen by requiring pharmacy benefit managers (PBMs) to compete fairly and transparently for our business in an online marketplace. Right now, there's legislation advancing in both the Senate and the House (SF 2178/HF 2327) that would create this reverse auction and put Minnesota on a path to redirecting meaningful value from PBMs to state purchasers and taxpayers.
PBMs are middleman companies that administer prescription drug benefits for health insurance plans and set reimbursement rates for pharmacies. They determine which medicines will be covered — through a list called a formulary — and how much patients, businesses and state and county governments pay for them. This includes the State Employee Group Insurance Program (SEGIP), which covers approximately 140,000 Minnesotans. This is where our legislation comes in.
How PBMs determine cost is extremely complex. Bringing transparency and marketplace competition to the process of securing a PBM is arguably the best possible solution for making prescription drug benefits affordable to the state, as well as for state workers and patients.
Our legislation addresses the root problem of transparency and accountability with PBM contracts. We would directly eliminate any opportunity for a PBM to overcharge the state by creating a straightforward online competitive marketplace using advanced technology. This program would drive costs down through multiple rounds of bidding in which the PBMs contending for the state's business can see what its competitors are putting forward.
And from start to finish, Minnesota would have full control of the end contract with the winning company. PBMs wouldn't be able to participate in the auction unless they agreed to the terms of the state's contract, which isn't the case today.
It's a proven and quantifiable approach. In New Jersey, Democrats, Republicans and Independents lined up to support passage of similar legislation in 2017, which has resulted in savings projections of $2.5 billion over a five-year period and made possible the underwriting of improvements in state employee benefits. New Hampshire followed in 2019 with bipartisan, bicameral support. And in Maryland, the PBM reverse auction passed unanimously in the General Assembly and became law in May 2020.
This change has been welcomed by public-sector unions where it has been adopted because the end result has been lower copays and premiums for members. Given the early momentum and bipartisan support for our legislation, there's no reason why Minnesota can't help lead this growing movement to deliver meaningful change that benefits taxpayers and public employees.
Health care policy is full of complexities, but let's choose what's in the best interest of Minnesotans. They deserve fair and honest contracts, especially when it comes to what we all pay for prescription drugs.
Michelle Benson, R-Ham Lake, is a member of the Minnesota Senate. Michael Howard, DFL-Richfield, is a member of the Minnesota House.