Pharmacy benefit managers and health carriers inclusion of lower-cost drugs in formularies requirement provision and lowest out-of-pocket-cost drug to patient formulary tiering preference provision
Summary
SF 1876 would require pharmacy benefit managers (PBMs) and health carriers to include lower-cost therapeutically equivalent drugs in their formularies when a more expensive equivalent is already covered. For example, if a plan covers a brand-name drug, it would also have to cover a lower-cost equivalent generic if one is available; similarly, if a generic is covered, the corresponding brand-name drug would have to be included if it is cheaper. The same rule applies to biologics and biosimilars, with the bill directing plans to include the lowest-wholesale-acquisition-cost equivalent option.
The bill also requires formulary design and tiering to favor the drug option with the lowest out-of-pocket cost for the patient. PBMs and health carriers could not use prior authorization, step therapy, or other coverage restrictions to make the lowest-cost option harder to access, and they could not place pharmacy restrictions that interfere with access to that option. An exception applies when the patient’s cost-sharing is already at or below specified thresholds: $25 for a generic drug and $55 for a brand-name drug. The proposal is set to take effect January 1, 2026.
Impact
The bill would add a new section to Minnesota Statutes chapter 62W governing PBMs and health carriers, creating a statutory requirement to include lower-cost equivalent drugs in formularies and to structure tiers around the lowest patient out-of-pocket cost. It would affect prescription drug coverage administration, formulary management, and utilization controls for commercial health plans and PBM arrangements in Minnesota, particularly for brand/generic and biologic/biosimilar substitutions. The bill would also limit the use of prior authorization and step therapy for the lowest-cost covered option, while preserving an exception for plans with relatively low cost-sharing.
Sentiment
No committee transcripts or recorded votes were provided, so there is no direct evidence of debate or formal support/opposition in the available record. Based on the bill text and caption, the measure appears aimed at lowering prescription drug costs for consumers and increasing access to cheaper equivalent medications. The overall policy direction suggests a consumer-protection and affordability focus, with the main operational burden placed on PBMs and health carriers.
Contention
The likely points of contention are the bill’s restrictions on formulary design, especially the mandate to include lower-cost equivalents and the prohibition on prior authorization, step therapy, and other access barriers for the lowest out-of-pocket option. PBMs and health carriers may view these provisions as limiting their ability to manage drug utilization, negotiate rebates, or design formularies based on broader cost considerations. Supporters would likely emphasize reduced patient cost-sharing and easier access to cheaper generics and biosimilars, while critics may argue the bill could reduce flexibility in benefit management or complicate formulary administration.
Similar To
Pharmacy benefit managers and health carriers required to include lower-cost drugs in their formularies, and formulary structure and formulary tiering for each health plan required to give preference to the drug with the lowest out-of-pocket cost to the patient.
Pharmacy benefit managers and health carriers required to include lower-cost drugs in their formularies, and formulary structure and formulary tiering for each health plan required to give preference to the drug with the lowest out-of-pocket cost to the patient.
Pharmacy benefit managers and health carriers usage of prescription drug rebates and other compensation requirement to benefit covered persons provision
Regulation of pharmacy benefit managers, fiduciary and disclosure requirements on pharmacy benefit managers, and application of prescription drug payments to health insurance cost-sharing requirements. (FE)
Pharmacy benefit managers and health carriers required to include lower-cost drugs in their formularies, and formulary structure and formulary tiering for each health plan required to give preference to the drug with the lowest out-of-pocket cost to the patient.
Requires health plan coverage to include generic drugs and biosimilars where the wholesale acquisition cost of such generic drugs or biosimilars is lower than the brand drug's wholesale acquisition cost.
To Mandate The Use Of Biosimilar Medicines Under Health Benefit Plans; To Require A Healthcare Provider To Prescribe Biosimilar Medicines; And To Improve Access To Biosimilar Medicines.