by Scott McClallen
A bipartisan bill claims it would reduce the cost of prescription drug costs to save taxpayers a potential millions – if not billions – of dollars.
Sen. Michelle Benson, R-Ham Lake, held a Friday news conference with Rep. Mike Howard, D-Richfield, highlighting the bill
SF 2178 would allow the state to share bid information submitted by pharmacy benefit managers (PBMs) for public employee contracts. The reverse auction process incentivizes PBMs to compete against each other by submitting lower offers in bidding rounds to win a contract, which is meant to achieve cost savings without impacting the quality of state health benefit plans.
“This bill seems complicated but is in fact quite simple,” Benson said. “Inviting more competition into our state bidding process leads to better contracts for state employees which causes savings for taxpayers.”
Minnesota’s current PBM procurement process complicates comparing bids, Benson said. This bill permits a more straightforward approach where PBMs compete for the best price under the same contract terms. New Jersey first implemented this reverse auction process in 2017 and is projected to save $2.5 billion on public employees’ drug spending in the first five years, according to written testimony from Dudley Burdge, a New Jersey State Health Benefits Commissioner.
Burdge said total state savings for the five years under PBM contracts awarded through two reverse auction processes are projected at $2.5 billion – an average annual reduction in prescription drug spending of $500 million per year.
Burdge said the technology that automatically reviews real-time bills enabled the recovery of an additional $46 million in prescription claims overcharges by the incumbent PBM who won the contract through the reverse auction.
“I have always made it a priority to work to lower health care costs and make government work more efficiently; this bill accomplishes both,” Benson said. “This legislation builds off our work in prior sessions to simplify the health procurement process and make PBMs accountable. Senate Republicans continue to lead the way pioneering thoughtful health care reform that makes a meaningful impact on people’s lives.”
On Wednesday, the bill was heard in the State Government & Elections Committee and was laid over for possible inclusion in the committee’s omnibus finance bill. Howard is carrying the bill in the House, where it awaits a hearing.
“Utilizing this reverse auction process allows the state to leverage technology and innovation in order to get a better deal on prescription drugs for more than 100,00 Minnesotans,” Howard said in the press conference. “In doing so, we take a more opaque contracting process and turn it into one that’s more transparent, generating competition amongst for-profit PBMs to again get a better result for Minnesotans.”
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Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.