Bill would require health plans to prefer lower-cost drugs on formularies; committee adopts amendment and refers measure to Commerce

Senate File 1876 would direct health plans to include therapeutically equivalent lower-cost drugs on their formularies to ensure cheaper options are available to patients and to encourage competition at the manufacturer-to-plan level.

Sponsor Senator Mann said the bill targets situations where manufacturers raise list prices to generate larger rebates; mandating that plans include a lower-cost alternative would let competition lower net costs and give patients cheaper options at the pharmacy.

The committee adopted an A3 amendment that allows plans to avoid the lower-cost requirement if the plan offers a low patient cost-sharing alternative, preserving purchaser choice while ensuring patients can access lower out-of-pocket options.

Testimony from the Minnesota Council of Health Plans and PBM representatives argued that the lowest list price is not always lowest net cost to the plan or patient because rebate mechanics can make a higher-list-price product cheaper after rebates; they urged broader reform focused on manufacturer pricing or rebate structures. The Association for Accessible Medicines asked that biosimilars with a wholesale acquisition cost (WAC) below the reference biologic be preferred to realize biosimilar savings.

Committee members from both parties described patient safety stories and urged action to reduce disruptions and to give patients clear lower-cost options. The committee recommended SF1876 as amended and referred it to the Committee on Commerce.