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HF 3931

Use of spread pricing by pharmacy benefit managers prohibited, license application fees increased, permissible sources of income limited, fiduciary duties imposed, and money appropriated.

2025-2026 Regular Session Introduced by Kristin Bahner and 3 co-sponsors

Prohibits spread pricing by PBMs and imposes fiduciary duties to act in plan sponsors’ and beneficiaries’ best interests, with stronger oversight.

Introduction and first reading, referred to Health Finance and Policy
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Bill Summary · HF 3931

Summary of HF 3931 (2025-2026) — Minnesota

Purpose and intent

HF 3931 aims to reform how pharmacy benefit managers (PBMs) operate within Minnesota by:
- Prohibiting the use of spread pricing.
- Increasing license application fees.
- Limiting permissible sources of income for PBMs.
- Imposing fiduciary duties related to pharmacy benefit management.
- Directing money appropriations to implement and administer these changes.

The bill seeks to increase transparency, reduce potentially adverse financial incentives in PBM practices, and strengthen regulatory oversight to protect payers (including insurers), prescribers, and patients.

Key provisions and changes

1) Prohibition on spread pricing

  • Prohibits PBMs from engaging in spread pricing, i.e., charging one price to a plan sponsor or payer while reimbursing pharmacies at a higher price and retaining the difference.
  • Aims to reduce hidden markups and ensure that dollar differences are not used to generate additional PBM revenue at the expense of plan sponsors and beneficiaries.

2) Increased license application fees

  • Raises license application fees for PBMs (and possibly related entities) to fund regulatory review, oversight, and administration.
  • Fee adjustments are intended to improve regulatory capacity and oversight effectiveness.

3) Limitation on permissible income sources

  • Restricts the types of income PBMs may derive from their relationships with payers, pharmacies, and other stakeholders.
  • Potentially curtails revenue streams such as certain administrative fees, negotiated rebates, or other ancillary income that could create conflicts of interest or undermine transparency.
  • Increases the focus on legitimate, disclosed compensation aligned with managing pharmacy benefits rather than extracting undisclosed profits.

4) Fiduciary duties

  • Imposes fiduciary duties on PBMs, requiring them to act in the best interests of plan sponsors and beneficiaries.
  • Elevates the standard of care and accountability, potentially requiring PBMs to avoid conflicts of interest and to disclose material relationships and compensation practices.

5) Appropriations and administration

  • Specifies money appropriated to implement provisions, support enforcement, and administer the new requirements.
  • May establish a timeline for regulatory implementation and compliance milestones.

Who and what is affected

  • PBMs operating in Minnesota: Subject to new prohibitions (spread pricing), fee changes, income-source restrictions, and fiduciary duties.
  • Payers and plan sponsors: Benefit from increased transparency, potential cost containment, and stronger protections against undisclosed PBM profits.
  • Pharmacies: May be affected by changes in pricing structures and incentives; the intent is to reduce hidden spreads and improve price signals.
  • Consumers/patients: Potential indirect impact through more transparent pricing and potentially lower drug costs or improved formulary management.
  • Regulators and administrative agencies: Charged with enforcing the new rules, collecting fees, and overseeing compliance.

Procedural and timeline aspects

  • Introduction and first reading: March 5, 2026, referred to the Health Finance and Policy committee.
  • The bill’s progression will depend on committee action, potential amendments, and floor votes in the Minnesota House of Representatives.
  • If enacted, implementing regulations and administrative processes would be developed to enforce the spread pricing ban, fiduciary duties, and fee/income limitations, with associated appropriations to support enforcement.

Notes

  • Specific numerical details (e.g., exact increases in license fees, precise definitions of permissible income sources, and the scope of fiduciary duties) are not provided in the summary. The bill text would specify these parameters, including any exceptions, enforcement mechanisms, penalties for noncompliance, and applicable effective dates.
  • Co-sponsors include Kristin Bahner, Steve Elkins, Liz Reyer, and Robert Bierman.

Compiled from official sources — confirm details with the bill’s official record.

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