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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Emma Hurley Palmer