Michigan signs PBM reform law with new transparency requirement

Michigan Gov. Gretchen Whitmer signed a series of pharmacy benefit management reforms into law on Wednesday, including bills that don’t discriminate against pharmacies they don’t have a relationship with.

The signing of the three bills Wednesday comes less than a week after the Federal Trade Commission (FTC) was deadlocked on whether to investigate PBM contracting practices.

“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,” said Whitmer in a statement Wednesday. “This bill brings much-needed transparency to our healthcare system.”

The legislation prohibits PBMs from forcing pharmacists to sign gag clauses that prevent pharmacists from telling consumers it is cheaper to purchase drugs out-of-pocket and not through their insurance.

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Michigan also will now require PBMs to get licenses and to file transparency reports with state officials to give consumers information on the “backend cost and profits of the medications they are prescribed,” according to a release on the law.

The law bans spread pricing where a PBM can drive up costs for reimbursing a pharmacist for prescription drugs and prohibits a PBM from charging a co-pay higher than the selling cost of the drug. The state is the 15th to ban spread pricing, according to data from the National Conference of State Legislatures.

In addition, PBMs cannot discriminate against any pharmacy solely because the carrier doesn’t have a vested interest in the pharmacy nor against any 340B covered entities.

The Michigan law comes less than a week after the FTC deadlocked on whether to initiate a study on PBM contracting practices such as direct remuneration fees. The commission voted 2-2, with both Republican members voting against it, thereby nixing any chance of such a study.