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Colorado Governor Signs PBM Reverse Auction Into Law

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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Emma Hurley Palmer

(805) 559-0122

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