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Express Scripts

This 2011 photo shows a building on the Express Scripts campus in Berkeley, Missouri. Express Scripts is the nation's largest pharmacy benefits manager.

Montana's state auditor is trying to override a veto on a bill his office backed to regulate the interactions insurance companies have with pharmacy benefit managers.

Senate Bill 71 passed the Legislature earlier this spring by wide margins, 71-27 in the House and 37-13 in the Senate. Auditor Matt Rosendale, a Republican, said in a press release Monday announcing the override effort he estimated the bill would save Montanans about $8 million a year.

The bill, which was carried by Sen. Al Olszewski, R-Kalispell, passed with enough support that it triggered an automatic poll of legislators about a veto override. Ballots went out last week and are due back June 14. If two-thirds of both the House and Senate vote to override the veto, the bill will become law. The bill passed by more that that threshold.

"If every legislator who already voted to lower prescription drug costs votes for this bill one more time, it will become law,” Rosendale said in a press release Monday. “All it takes to save Montanans millions on their medications is for legislators to stick to the votes they originally cast." 

In his veto letter May 9, Gov. Steve Bullock, a Democrat, said the bill would increase costs for Montanans.

"The governor’s office feels confident that legislators understand this bill could do more harm than good by increasing health care costs for Montanans and reducing the state’s ability to reduce premiums through the new reinsurance program, and that we have now put into law several pieces of legislation to actually help reduce prescription drug costs," Bullock's communications director Marissa Perry said in a statement Monday.

Pharmacy benefit mangers (PBMs) are the middlemen who insurance companies or employers pay to process claims at the pharmacy and negotiate prices with the pharmacy and drug manufacturer. In SB 71, the auditor's office would not have changed how it regulates PBMs but would instead focus on the contracts insurance companies enter into with them.

That's because the auditor's office felt it had better standing to regulate the insurance companies than PBMs.

The bill would have required insurance companies get all the rebates pharmacy benefit managers receive from the drug manufacturers, and require insurance companies to use those savings to lower out-of-pocket costs for consumers.

Bullock objected to that, writing in his letter, "While this may seem like a good idea on the surface, in practice it means that smaller and nonprofit insurance plan customers can no longer take advantage of these rebates. The result is higher drug costs for plan members."

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Rosendale's office issued a "fact check" of Bullock's veto, questioning the evidence that the bill would have resulted in higher costs. A fiscal note attached to the bill only estimated costs for the state to implement the legislation, which were minimal, and not its effect on insurance companies or people paying premiums.

In its response, the auditor's office said similar steps taken by the former manager of the state's health insurance plan saved about $7.4 million in the first year of implementation. 

The response was also critical of how Bullock portrayed the change to rebates, saying PBMs would continue to handle rebates under the bill and only require the middlemen pass rebate money onto insurance companies and the money be used to lower premiums.

The bill would have also eliminated any requirement that pharmacy benefit managers have for mail-order prescriptions. In his veto, Bullock said that provision would have hurt Montanans who don't have easy access to brick-and-mortar pharmacies.

Rosendale's response to that section of the veto said SB 71 would have preserved access for rural Montanans.

The governor also criticized the bill, which only would have affected the individual exchange for insurance, saying it would introduce more volatility into an already delicate marketplace.

Bullock did sign SB 83, which sets limits on fees PBMs can charge pharmacies, says that patients can't be charge a copay that exceeds the cost of the drug, and establishes other rights for pharmacies. The bill was carried by Rep. Steve Fitzpatrick, R-Great Falls.

Seven other bills have had veto override polls sent out, including a bill about campus free speech laws, one to pause taxes on broadband infrastructure and another on sports gambling.

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