Whitmer signs bills with hopes of 'significant' impact on prescription drug prices

Craig Mauger
The Detroit News

Delta Township — Gov. Gretchen Whitmer signed bills Wednesday that both Republicans and Democrats believe will reduce prescription drug prices in Michigan by imposing new limits and transparency standards.

The bipartisan package sets up licensing requirements for pharmacy benefit managers, the companies paid by health plans to manage prescription drug benefits. The bills force them to file annual reports on their costs and bar them from making patients pay copays that are higher than the selling cost of drugs.

Rep. Julie Calley, R-Portland, one of the sponsors of the bills, described them as "sweeping" and "broad." She said they attempt to "rein in" ways pharmacy benefit managers have learned to make extra revenue.

"We want to know what they're bringing in versus what they're giving out so we understand exactly how much they're benefiting as the middle men who've been operating in the darkness all this time," Calley told reporters.

Whitmer, a Democrat, signed the bills at an event inside a Lansing area Meijer on Wednesday morning. Standing in front of a row of TV cameras near the electronics and toy sections, she said the policies will ensure fair drug pricing and make a difference in people's lives.

"For too long, unlicensed pharmacy benefit managers have been able to engage in practices that drive up costs for Michiganders whose lives and health depend on critical prescription drugs like insulin," Whitmer said.

Gov. Gretchen Whitmer speaks at a bill signing event at a Lansing area Meijer on Wednesday, Feb. 23, 2022.

The governor's Prescription Drug Task Force recommended in 2020 the Legislature take action to require additional reporting from pharmacy benefit managers. The reporting "could lead to a greater understanding of what is causing the increase in prescription drug costs in the manufacturing space," the panel said.

Pharmacy benefit managers contract with pharmacies, negotiate discounts and rebates with drug manufacturers and process prescription drug claims, according to the task force.

There are four manager companies that administer drug benefits for a large majority of covered individuals in the United States, the report said. Their potential revenue streams from pharmaceutical companies and pharmacies "can incentivize them to act in ways that can be detrimental to the consumer," the task force said.

The bills ban a tactic called "spread pricing," in which a pharmacy benefit manager charges a health plan a contracted price for a drug while the price differs from the amount the manager pays the pharmacist.

"If your health plan is willing to pay a certain amount, then you should be getting the value for that," Calley said.

The bills also prohibit pharmacies from agreeing to a contract that bans the disclosure of drug prices or the comparative selling price of a generic drug.

One of the bills creates the "Pharmacy Benefit Manager Licensure and Regulation Act." Under it, by April 1, 2025, and each following April 1, a pharmacy benefit manager must file a "transparency report." The report must include information on the prices the pharmacy benefit manager charged a pharmacy for a specific drug or class of prescription drugs.

The new requirements will reveal what pharmacy benefit managers are up-charging pharmacies, said Sen. Curt VanderWall, R-Ludington, chairman of the Health Policy and Human Services Committee.

The transparency will lead to savings, but it might take some time to determine what the specific impact will be, he said.

"This is going to be a significant cost reduction," VanderWall said.

The legislation makes pricing practices fairer, increases transparency and helps customers afford the medications they need to live healthy lives, said Rick Keyes, Meijer president and CEO.