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MMB seeks flexibility on PBM contracting; supporters and opponents argue over reverse-auction law
Summary
Senate File 3055 would change Minnesota's reverse-auction procurement requirements for pharmacy benefit managers. Proponents from MMB argued the law limits flexibility; advocates for the reverse-auction model and other stakeholders warned the bill would undo documented savings and transparency gains.
Senate File 3055, sponsored by Senator Mann, would adjust statutory requirements that direct Minnesota Management and Budget (MMB) to use a technology-driven reverse-auction procurement when contracting for pharmacy benefit manager (PBM) services for the state employee group insurance program. Committee testimony on April 1 presented sharply divided views on whether the reverse-auction statute should be altered.
MMB's witness, Galen Benschoo (Enterprise Director for Employee Insurance at MMB), said the agency seeks more contracting flexibility. Benschoo argued the current statute "needlessly limits competition" because the law effectively bundles two different services—reverse-auction platform administration and ongoing real-time claims monitoring—into a single procurement and that only a small number of firms bid when the services are combined. He said MMB's evaluation and the Office of the Legislative Auditor's (OLA) review found insufficient evidence to conclude the reverse-auction process produced net savings compared with the prior best-value procurement process.
Opponents, including Buck Humphrey of the Minnesota PBM Accountability Project, defended the reverse-auction approach, saying it created a transparent, highly competitive procurement environment and generated measurable improvements in pricing and guaranteed rebates. Humphrey told the committee the reverse auction produced "guaranteed additional 23% minimum rebates" in one award and helped identify overcharges through electronic reconciliation.
Senator Mann, sponsor of the bill, criticized PBM market behavior in broad terms: "PBMs were once hired to do a job, to decrease the cost of prescription drugs...that process has become very convoluted and quite perverted." Committee members asked detailed questions about the number of bidders, the vendor-selection process for auction platforms, and whether splitting procurement of platform administration and claims monitoring would expand competition.
The nut graf: The bill seeks statutory contracting flexibility so MMB can consider alternative PBM arrangements beyond a single full-service PBM; supporters at MMB argued that change would expand competition and save money, while reverse-auction advocates and some consumer groups urged retaining the auction statute as the most competitive mechanism yet used by the state.
The committee laid Senate File 3055 over for possible inclusion; no final passage vote was recorded on April 1.
