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Maine Governor Signs Bill Regulating PBMs, Requiring Rebates Be Passed On to Consumers

Yesterday, Maine Democratic Governor Janet Mills signed four bills into law aimed at lowering prescription drug prices. This is encouraging news for those working to reduce lower drug costs. One of these bills, LD 1504, is especially significant-it regulates pharmacy benefit managers (PBMs) and requires that the rebates they extract from drug manufacturers be passed on to consumers. Its passage is a substantial victory for consumers.

The bill was sponsored by Senator Heather Sanborn (D-28), who represents parts of Portland and Westbrook and is in her first term. The bill was unanimously approved by the Maine Senate and approved by the Maine House. At the bill signing, Governor Mills said that "the outrageous prices of prescription drugs are hurting Mainers, especially older Mainers on a fixed and limited income. No one should have to choose between food or medicine.." And Senator Sanborn told reporters that "Mainers shouldn’t have to sacrifice their health and well-being or go into debt because the cost of prescription medication is too high. This session, my committee set out to examine this complicated issue from every angle. Our goal was to figure out how we can pull every lever possible to lower the cost of prescription drugs and hold middlemen and drug companies accountable for driving up costs. I’m grateful to my colleagues for working to pass this set of bills swiftly through the Legislature and to the governor for signing them into law."

LD 1504 has a whole host of provisions that will improve oversight of PBMs and ensure they actually lower drug prices. To begin with, it requires PBMs to obtain a license from the Superintendent of Insurance and requires this license be renewed every three years. Its most important reform is that it indirectly regulates PBMs by requiring insurance companies to monitor all activities by the PBMs they contract with, and requiring all compensation (rebates and discounts) that PBMs receive from drug manufacturers to go to insurance companies. These insurance companies are required to use those funds to lower health insurance premiums and costs, including prescription drug costs.

The proposal also bans insurance companies and PBMs from requiring consumers to pay for more for a covered prescription drug than the applicable copayments for the drug, or the amount from the pharmacy will be reimbursed by the PBM or insurance company. These provisions ensure that insurance companies will hold PBMs accountable, and they will benefit consumers by combating price gouging and lowering costs.

PBMs claim that the rebates they get from drug companies in exchange for placing drugs on formularies are used to lower costs, but the available evidence suggests otherwise. PBMs also fight efforts to require transparency tooth and nail. LD 1504 is similar to a Montana bill that was approved by Montana's legislature; unfortunately Montana Governor Steve Bullock vetoed the bill and the legislature lacked the votes to override it.

Happily this situation was different. Legislators from both parties came out in support regulating PBMs and requiring rebates be used to benefit consumers, we submitted testimony for the bill, and the Governor wanted to take action to lower drug costs. Senator Sanborn hopes that this new law will be a model for other states; we agree and urge them to follow in Maine's footsteps.

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