Nevada could save millions with this future change to Medicaid

Sweeping reform to how prescription benefits are managed for Nevada Medicaid patients could save the state more than $100 million in future budget cycles, according to a law passed in the Legislature this session.

Pharmacy benefit managers act as a middleman in the health care industry, negotiating prescription drug benefits for insurers. The companies were initially created to work with drug manufacturers to reduce costs for health plans and patients. But mergers over the last decade have left three companies controlling 80 percent of the U.S. market.

Critics blame the consolidation for a lack of transparency about drug pricing and higher prices, prompting reform efforts throughout the country as states, including Nevada, work to better regulate the industry.

Nevada’s five Medicaid plans each have their own pharmacy benefit manager. Senate Bill 389 requires them to switch to a single pharmacy benefit manager and implement other pricing reforms. The changes, when completed by 2030, are expected to save the state $105 million in each future two-year budget cycle, according to the bill’s fiscal note.

One piece of reform

The switchover for Medicaid came as part of a larger effort to reform prescription drug pricing for both state-supported and private health insurance. Advocates promoted multiple reform bills in the 2025 Legislature.

SB 389 focused on changing how Nevada manages pharmacy benefits and pricing for the state’s 738,000 Medicaid patients. It passed with near-unanimous support in the Legislature and was signed into law by Gov. Joe Lombardo.

Private insurance reform, however, failed on the final day of the session despite bipartisan support. Ken Kunke, executive director of the Nevada Pharmacy Alliance, said he was surprised to realize the bill — SB 316 — failed to get the last procedural confirmation it needed to be sent to the governor’s desk.

“I was just so disappointed,” said Kunke. “So much work was done on this bill, and it was finally going to be time that we could help many people in Nevada, not just the Medicaid patients. It would bring transparency, and the division would be able to actually regulate.”

State Sen. Rochelle Nguyen, the bill’s sponsor, said she wanted to regulate the industry so that its fiduciary duty was to the patient. She said she will reintroduce something similar to it in the 2027 session.

“(I’m) not going to lie and say I’m not frustrated by the process when a good piece of legislation meets its end, but it is definitely something that I’ll continue to work on,” Nguyen, D-Las Vegas, said.

Implementing SB 389

State officials have until Jan. 1, 2030, to move Nevada’s Medicaid programs to a single pharmacy benefit manager. It would be responsible for reimbursing the state’s Medicaid providers at rates determined by the “Nevada average acquisition cost” — a new benchmark based on the average, actual cost of prescription drugs purchased by pharmacies and other providers.

The new law also prohibits the state contractor from using “spread pricing,” a practice in which a pharmacy benefit manager receives a higher payment from insurers than it reimburses retail pharmacies for dispensing a drug, keeping the difference to boost its profits.

Sen. Melanie Scheible, D-Las Vegas, said the legislation came from learning more about pharmacy benefit managers’ role in the drug costs for patients and insurers.

SB389 requires the drug procurement and reimbursement policy to generate the maximum amount of savings for the state. (Most Nevada Medicaid services have no co-pay costs for their patients, so the changes may not be noticeable to them.)

“We are facing dramatic federal cuts to our health care funding, and especially Medicaid, and anything that we can do in Nevada to save a penny to help provide medical care for people going forward is going to make the difference for somebody who receives Medicaid,” Scheible said.

Addressing high drug costs

Stacie Weeks, Nevada Medicaid administrator and incoming director of the Nevada Health Authority, said in a statement that the new law addresses the challenges that states have in purchasing for pharmacies, particularly in purchasing costly new-to-market drugs.

“We’re having to look at redesigning and reimagining how we purchase pharmacy (benefits) because of it,” the statement said. “With no relief in sight at the federal level to fix this, our only option is to take over this role of the PBM ourselves.”

Advocates said they were surprised at the commercial reform bill’s failure to reach the governor’s desk. It had unanimous support in the Assembly and two votes against in the Senate, but it did not make it out of the Legislature because the house of origin did not vote on an amendment before the session was scheduled to end June 2 — meaning the bill died.

SB316 called for stronger reporting requirements and regulations for the pharmacy benefit managers in Nevada. Opponents of the bill told lawmakers they were not against transparency but worried about the impact of regulation and proposed changes to their fiduciary responsibilities.

Tom McCoy, executive director at the Nevada Chronic Care Collaborative, said he suspected the reason the Medicaid reform passed but the private insurance reform did not had to do with the fiscal impact of reducing costs in the Medicaid program. He pointed to Nevada’s state budget in which revenues for the upcoming two-year budget were revised downward.

“I think that it was just, timing is everything in legislation,” he said. “I think the argument was solid, and the legislators said, ‘Hey, if we can save some money, let’s save some money.’”

Contact McKenna Ross at mross@reviewjournal.com. Follow @mckenna_ross_ on X.