Michigan governor Gretchen Whitmer recently signed into law a series of bipartisan bills that are aimed at cutting prescription prices by reining in pharmacy benefit managers. Different aspects of the laws went into effect automatically while other parts such as those pertaining licensing requirements and elimination of “spread pricing” and “gag clauses” are due to start in 2024. Whitmer stated that the new legislation, which were the results of a task force she formed in 2020 to address the matter, will foster transparency and accountability and inform state residents about the costs of their drugs and decrease prices.

Three organizations, CVS Caremark, Express Scripts and Optum Rx, serve as the country’s major pharmacy benefits managers or PBMS. CVS Health asked Whitmer and state lawmakers to veto the bills, dismissing them as “bad policy” and to focus on what the company referred to as high list prices set by big drug companies. Pharmacy benefit managers serve as third-party administrators of drug programs for business health plans, self-insured employer plans, Medicare Part D prescription drug benefit plans for seniors, the Federal Employees Health Benefits Program and state government employee plans.

Also known as PBMs, they have been more closely scrutinized in recent years because of their impact on drug prices. With the state new laws, they are no longer allowed to charge more for medication than they pay a pharmacy, nor can they stop a pharmacist from speaking with patients about costs or offering them more affordable alternatives. In 2018, then-President Donald Trump signed legislation to keep health insurance companies and PBMS from prohibiting pharmacists from notifying customers when paying cash would be more cost-effective than using insurance.

Other clauses in the laws will also go into effect such as bans on patients to pay co-pays that are higher than the actual cost of drugs and on exhibiting bias towards hospitals and medical facilities that offer drug discounts to Medicaid recipients.

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