Bullock gives reason on veto of pharmacy benefit manager bill

The office of Gov. Steve Bullock has sent the Havre Daily News a letter from Bullock explaining why he vetoed a bill that led to complaints about the veto, including from a couple of Havreites.

Bullock vetoed Senate Bill 71, sponsored by Sen. Al Olszewski, R-Kalispell. State Auditor Matt Rosendale, whose office regulates securities and insurance in Montana, issued a release calling the veto “siding with drug industry over Montanans.”

“It’s simply astonishing that Governor Bullock would side with the multi-billion-dollar drug companies instead of Montanans and the doctors, pharmacists, and other health care professionals who supported the bill,” Rosendale said in the release.

See related story online and on Page A2 of Friday’s edition of The Havre Daily News.

The release cites Havre City Council member and business owner Sarah McKinney, saying she was speaking as a private individual, not a council member, and cites Havre opthalmologist Dr. Marc Whitacre, as well as an antitrust lawyer and two pharmacy owners and Olszewski.

“I am disappointed that SB 71 failed due to the governor’s veto,” Olszewski said in the release. “This is a sad day for Montanans.”

Rosendale’s release said the bill, written by his office after two years of review of pharmaceutical prices in Montana, would have reformed the way health insurance companies contract with third-party middlemen known as pharmacy benefit managers. The bill would have prohibited kickbacks, price gouging, and ended conflicts of interest.

In his letter to Secretary of State Corey Stapleton saying he was vetoing the bill, Bullock wrote that it could have had other consequences.

He wrote that he was signing a number of bills Thursday that were designed to lower prescription drug costs, but was vetoing SB 71.

“I appreciate and respect the sponsor’s commitment to lowering prescription drug costs. I share that commitment … unfortunately, SB 71 is likely to do just the opposite of what the sponsor intends: It will increase costs.” Bullock wrote.

Most of the local legislators voted for SB 71, with Sen. Russ Tempel, R-Chester, and Jonathan Windy Boy, D-Box Elder, both saying they couldn’t see why Bullock vetoed the bill.

Temple said he can’t understand how Bullock believes it would raise drug prices, and Windy Boy said he had no idea why Bullock decided to veto the bill.

Rep. Jacob Bachmeier, D-Havre, emailed the Havre Daily News Friday morning that he supported many bills dealing with prescription drug prices that legislators worked across the aisle to pass, but he had problems with SB 71.

Bachmeier said the bill was soft on pharmacy benefit managers and hard on insurance companies, which could lead to higher premiums.

He added that he appreciates Rosendale wanting to get involved, but that it looked to him like the auditor was trying to take over the debate on PBMs and prescription costs.

“I didn’t see him involved in the conversation on all of the other successful bills we passed,” he said.

Reps. Josh Kassmier, R-Fort Benton, and Casey Knudsen, R-Malta, had not replied to the email the Havre Daily News sent Thursday by print deadline this morning.

Sen. Mike Lang, R-Malta, said in an email Saturday that he would reply by today, but the Havre Daily had not received his reply by print deadline this morning.

In his letter to Stapleton, Bullock wrote that the bill cut pharmacy benefit managers out of the rebate process, requiring that rebates go directly to insurers. That means that customers of smaller and nonprofit insurance companies would no longer receive the rebates, raising their drug costs, Bullock wrote.

“He wrote that it also increased the administrative costs for regional or nonprofit health plans, giving them 90 days to review and decide whether name-brand drugs would be covered, rather than 180 days given under federal law.

Halving the time to review will lead to increased costs, which are likely to be passed on to insurance customers in the form of higher plan prices,” Bullock wrote.

The bill also prohibited some mail-order pharmacies, relied on by many rural Montanans who do not have easy access to a brick-and-mortar pharmacy, he said. It could also lead to fewer insurance polices being available in some areas, reducing competition, Bullock added.

He said that, finally, SB 71 was directed only at the already most-volatile health insurance market, the individual market. The bill could lead to significant increases in prices by creating upward pressure in prescription drug prices, Bullock wrote.

In the letter, Bullock also named several bills addressing health care he had signed or planned to sign:

• Senate Bill 83, which gets at the problem directly by applying strict protections from certain pharmacy benefit manager practices;

• Senate Bill 125, the reinsurance bill to lower individual insurance premiums;

• Senate Bill 270, which prohibits pharmacy benefit managers from requiring pharmacies to charge consumers more in copayments than it costs to make a drug; and

• Senate Bill 335, which protects federally qualified health centers from discrimination in prescription drug pricing.