Trenton – Senate President Steve Sweeney today recommended New Jersey’s Pharmacy Benefits Manager (PBM) initiative to Minnesota legislators who are seeking health care cost savings similar to New Jersey, noting that the Garden State will save over $2.5 billion through its reverse auction program.
Senator Sweeney, who sponsored New Jersey’s PBM legislation, submitted written testimony to the Minnesota Senate State Government Finance and Policy and Elections Committee, which is considering legislation, S.F.2178, to require the use of a reverse auction for the procurement of a pharmacy benefit manager to manage and administer the prescription drug benefit for its State Employees Group Insurance Program.
Senator Sweeney said he was pleased to see other states moving ahead with legislation to implement the PBM program that New Jersey pioneered. New Hampshire, whose Senate Commerce Committee the Senate President testified before in January 2020, enacted a similar law and recently selected a vendor for its PBM program. Maryland has also been considering PBM legislation, and a bill was introduced in the Colorado Legislature this week.
“The innovation to prescription drug purchasing we adopted features an online auction, powered by a cutting-edge, ‘big data’ analytics technology platform, to create a dynamic, truly competitive marketplace in which PBMs bid and counter-bid against one another to win the state’s business. Think of it as an ‘eBay’ for PBMs,” Senator Sweeney said in his written testimony to the Minnesota Senate committee.
Senator Sweeney noted that the New Jersey model created “a competitive marketplace in which PBMs compete in a transparent, online auction” for the right to sell prescription drugs to the state at the lowest cost.
State government was able to use the same technology platform to conduct ongoing, automated and very fast review of prescription drug claims invoices, enabling the state to flag any overcharges within a few hours of invoice submission.
While original projections forecast PBM reverse auction savings of $1.6 billion over three years, the ultimate savings proved higher, Senator Sweeney pointed out.
“In September 2018, just nine months into the first plan year under the new pharmacy benefits contract awarded through our PBM reverse auction, Governor Phil Murphy reported that the technology-enabled PBM selection and accountability process had reduced pharmacy costs for state and local governments by over 25 percent,” Senator Sweeney noted.
The Senate President praised his Senate and Assembly colleagues, leaders of the state’s public employee unions, America’s Agenda and officials in the previous Administration who partnered with him to make the PBM program savings a reality for over 750,000 public employees and family members.
Senator Sweeney offered to assist the Minnesota legislators in implementing the New Jersey model.
(Attached: Senate President Sweeney’s testimony)