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New Law Ushers in Significant Savings on Prescription Drug Costs for the State


WASHINGTON, DC (June 14, 2021) – On June 7, Colorado’s HB 1237, the Competitive Pharmacy Benefits Manager Marketplace bill, was signed into law by Governor Jared Polis. Sponsored by Representatives Susan Lontine (D) and Janice Rich (R) and Senators Barbara Kirkmeyer (R) and Dominick Moreno (D), this measure will capture historic prescription drug savings through a pharmacy benefit manager (PBM) reverse auction for its public sector employees.


PBM’s manage public employee prescription benefits. The new law allows Colorado to procure its PBM for state workers through a dynamically competitive online reverse auction, then hold the selected high-value PBM accountable to the state with ongoing, automated, validation of 100% of PBM claims. The fully visible online competition allows states to compare PBM bids in a fair, detailed, side-by-side comparison as PBMs attempt to underbid each other over multiple bidding rounds.


“With the passage of HB 1237, Colorado became a leader in securing significant taxpayer savings on prescription drugs, an imperative of so many states struggling to provide high quality healthcare for its workers while balancing budgets,” said Mark Blum, executive director of America’s Agenda. “Importantly, the PBM reverse auction model has already proven that sizable savings can be achieved without raising insurance premiums for state workers.”


With the passage of HB 1237, Colorado joins the State of New Jersey in implementing a PBM reverse auction for public employees. Through the reverse auction, New Jersey reduced its total spending on prescription drugs by approximately 20 percent or $2.5 billion over five years. New Hampshire, Maryland, Louisiana, and Minnesota are currently considering similar legislation.


America’s Agenda is a proud founding member of the PBM Accountability Project of Colorado, which is made up of public employee unions and healthcare advocates in the state working together to educate policymakers about the drug pricing process, the role of PBMs, and the benefits of the reverse auction model.


America's Agenda is a national health care alliance that brings together labor unions, businesses, healthcare providers, and policymakers who share a common commitment to our mission of assuring access to affordable, high quality healthcare for every American.


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Contact:

Emma Hurley Palmer

(805) 559-0122

emma@contextdc.com


America’s Agenda chief economist Mike Kapsa, Ph.D. was appointed to the Biden Administration’s Department of Labor State All Payer Claims Databases Advisory Committee (SAPCDAC). The work of this newly formed advisory committee is essential for our nation to achieve the goal of a truly coordinated health care system.


The SAPCDAC will advise the Secretary of Labor on the standardized format for the voluntary reporting by group health plans to State All Payer Claims Databases and provide guidance to the states on the process by which states may collect such data.


Mike was chosen to serve as one of 13 advisory committee members reporting directly to Labor Secretary Marty Walsh based on his expertise in health care data analysis and the depth of his experience in working directly with unions, employers, and health plans in analysis and exchange of health care information.


The first meeting of the SAPCDAC was held virtually on May 19, 2021. Opening remarks were provided by Administration officials and the meeting focused on advisory committee member discussion of the needs surrounding a standardized reporting format and guidance. The types of information reported would include medical claims, pharmacy claims, dental claims, and eligibility and provider files collected from private and public payers. The committee also reviewed written comments submitted prior to the meeting and oral statements delivered during the meeting. The meeting details and information about the SAPCDAC are available here.


The advisory committee will provide recommendations to the Department of Labor pursuant to the Consolidated Appropriations Act.


Maryland Law Can Save State Millions with Reverse Auction to Select Pharmacy Benefit Manager


Annapolis, MD (May 19, 2021) – America’s Agenda Executive Director Mark Blum commended the State of Maryland for issuing a Request for Proposals (RFP) this week to select a technology partner to conduct a reverse auction for Maryland’s next Pharmacy Benefit Manager (PBM). The RFP and reverse auction are required under the Maryland Competitive Pharmacy Benefits Manager Marketplace Act (HB1150) that passed the Maryland General Assembly unanimously during the 2020 legislative session.

“The RFP issued this week is an important step to conducting a PBM reverse auction with potential to save Maryland taxpayers millions of dollars each year,” stated Blum. “The State of Maryland spends approximately $700 million for a PBM to manage its prescription drug benefit for state employees, retirees and Medicare recipients. Through a dynamically competitive and transparent process, Maryland can ensure that the state is receiving the best value for taxpayers.”

The RFP issued by the State of Maryland can be found here.

Under a reverse auction, pharmacy benefit managers, or "PBMs," compete for a state prescription drug contract in a transparent, online auction powered by a technology-enabled marketplace. This fully visible online competition allows states to compare bids in a fair, detailed, side-by-side comparison as PBMs attempt to underbid each other over multiple bidding rounds in a dynamic, competitive marketplace. Compared to the current complicated, costly, and drawn-out conventional RFP process, the state could complete the technology-enabled PBM reverse auction and award the contract within a matter of weeks.

During a presentation to the Maryland Prescription Drug Affordability Board (PDAB) in March, Blum described New Jersey's success with the reverse auction model. The modernized process reduced New Jersey's prescription drug spending by more than $1.6 billion in its first PBM reverse auction compared to the state's previous prescription drug cost trend. The reverse auction's ongoing electronic review and adjudication of PBM invoices helped produce an additional savings of nearly $46 million, contributing to an immediate first-year reduction in New Jersey's prescription drug costs by 25 percent. With two reverse auctions for the state's public employee prescription drug plan under its belt, the state has saved $2.53 billion over five years without any cuts in public employee benefits.


On Monday, May 24, the Prescription Drug Accountability Board will hear an update on the progress of the implementation of the 2020 law from the bill’s sponsor and chief proponent, Delegate Bonnie Cullison from Montgomery County.

America's Agenda is a national health care alliance that brings together labor unions, businesses, healthcare providers, and policymakers who share a common commitment to our mission of assuring access to affordable, high quality healthcare for every American.

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Contact:

Emma Hurley Palmer

(805) 559-0122

emma@contextdc.com

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