Montana State Auditor and Insurance Commissioner Troy Downing has been working closely with the Montana Legislature to bring much needed limits on Pharmacy Benefit Managers and how they greatly add to consumer prescription costs.

Downing spoke to KGVO News on Tuesday and described the issue.

“I was talking to somebody over at Blue Cross who said that nearly a third of the money that they spend on patient care is going to prescription drugs,” said Downing. “If you think about that all the money that they're spending for surgeries and hospitalizations and doctor's appointments and everything else that I'm paying for, that a third of it is going to prescription drugs.”

He explained the role of a Pharmacy Benefit Manager.

“One of those middle players is called a PBM or a Pharmacy Benefit Manager, and they manage the prescription drug programs for these health plans,” he said. “They work with the drug manufacturers and they try to get bulk discounts and do what they can on the manufacturers and they work with the pharmacies and they put together with these plans, and these formularies.”

He described a ‘formulary’.

“A formulary is basically a list of the drugs that are available to the insurance company in that plan,” he said. “So you can imagine on the manufacturer side it's incredibly important to have your drug end up on this formulary because if it's not, then it's not a reimbursable drug. One of the ways that the manufacturers entice PBM’s to get these drugs on their formularies is through these rebates and other incentives.”

Downing said the Pharmacy Benefit Managers are largely unregulated, so his office has no idea how many there actually are in the state.

“Since there is no oversight currently, and there is no requirement to register or be licensed, we don't know actually how many PBM’s are doing business in the state of Montana,” he said. So a big part of this bill is just turning the lights on.  It's very dark right now and there's no oversight. But, once we have the lights on, we'll have a better idea of knowing what we don't know.”

Following is a message from Commissioner Downing.

Spending on prescription drug costs is expected to be the fastest-growing health category over the next decade. That's why our agency is leading the effort to reduce drug prices by introducing Senate Bill 395. This legislation oversees the middlemen in the pharmaceutical supply chain known as Pharmacy Benefit Managers or PBMs. Currently, we have no way of knowing how many PBM's operate in the state or what they're charging health plans for prescriptions. This bill will require licensure and force transparency by requiring PBMs to report rebates, costs, and fees so that health plans can better negotiate for lower prices. With this information, our agency can ensure consumers are getting the lowest possible prices for their prescription drugs.

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