Blog

Oct 27

Written by: Mark Blum
10/27/2017 9:40 AM 

 Over the past year, America’s Agenda worked with public employee unions, legislative leaders, and State government officials to tackle escalation in the price they pay for prescription medicines.  That effort married adoption of best-in-class contract terms and big data analytics of complex drug pricing data into a cohesive strategy to compare reliable future cost projections of proposals made by various pharmacy benefit managers, or “PBMs”, seeking to supply prescription drug benefits to 750,000 New Jersey public worker union members, retirees, and dependents.

 
The projected real costs of those PBM proposals were put online in a dynamic, real-time “reverse auction” in which PBM competed in successive bidding rounds to win the State’s business – something like an “eBay for PBMs”. The reverse auction created unprecedented dynamic competition between PBM vendors vying for the State’s business, as they slashed their own drug pricing bids repeatedly over the course of the reverse auction.
 
New Jersey’s 2017 reverse auction conducted on behalf of the State’s public employee Rx plan – an account worth well over $2 billion per year – created a drop in overall drug spending in the winning PBM offer by an eye-popping 18%!  This savings amounted to a $1.6 BILLION savings for New Jersey taxpayers and union families over a 3-year PBM contract -- savings that will be available to fund other pressing State priorities.
 
But this was only the beginning of savings for New Jersey taxpayers and public employees.  The big data analytics technology platform used to conduct the reverse auction will be re-deployed over the course of 2018 to capture an additional Rx cost reductions through a secondary, follow-up strategy.  Over the course of the coming plan year, the NJ public workers Rx plan will use the same technology platform to conduct 100% review of multi-million dollar PBM invoices as they’re received every two weeks with a 48-hour deadline for payment.  The technology will be used to flag errors in the invoices before the invoices are paid!  We expect New Jersey’s net savings will be increased substantially by automatically and electronically reviewing every PBM drug claim for overcharges.
 
Can other employers, public and private, deploy strategies such as the State of New Jersey is deploying to produce comparable savings?  Are there additional strategies that employers in the public and private sectors can utilize?  
These questions are the subject of a webinar being hosted on Tuesday, October 31, at 12 noon Eastern Standard Time, by the National Pharmaceutical Council and the National Alliance of Healthcare Purchaser Coalitions.  The webinar, Employer Perspective on Prescription Drug Management: New Research on What’s Working, What Needs Fixing, will examine how current PBM models are and aren’t meeting employer needs, how employers would like to see those models improve, and what actions employers can take to increase their satisfaction with PBM vendors. 
 
Webinar speakers will also discuss the results of a 2017 nationwide survey on employer perspectives regarding PBMs.  Information on how to register for the webinar can be found here.
 
New Jersey’s success in driving its Rx spending down by $1.6 billion contributed to a halt in growth of health care premiums for New Jersey State and local government employees.  That’s right: 0% health care premium growth for 2018!    Can this flattening – or at least substantial reduction – in growth of health costs be sustained.?  Can supplementary employer strategies to reduce Rx costs be effective?  You can listen to current thinking about these questions by registering here.

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