PBM Reverse Auction Could Help Colorado Save Millions Annually; Business and Labor Leaders Come Together to Support New Legislation
(Denver, CO) – Today, a diverse group of Colorado leaders announced that they will be seeking to help the state and its taxpayers save millions each year through a new, competitive process to determine how Colorado contracts with its Pharmacy Benefit Manager (PBM). According to initial estimates, this process would save the state between $6.7 million - $10.2 million annually.
PBMs are companies that manage the prescription drug benefit for public and private health plans, negotiating rebates with drug manufacturers, and establishing reimbursement rates paid to pharmacies for filling prescriptions. Sponsored by Representatives Susan Lontine and Janice Rich and Senators Dominick Moreno and Barbara Kirkmeyer, the “Competitive Pharmacy Benefits Manager Marketplace" bill will establish a modernized, transparent, and dynamic process for PBMs to compete over their cost to win for contracts with the state of Colorado.
“A PBM reverse auction creates a transparent marketplace where PBMs compete with each other to win award of a state contract by bidding over multiple rounds to provide the benefits we want at the lowest price,” said Representative Susan Lontine (HD 1 - Denver/Jefferson counties). “Our bill introduces dynamic competition to the PBM bidding process, deploying cutting edge technology to enable apples-to-apples comparison of the cost to the state of each PBM’s pricing proposal. This policy has proven to be incredibly successful, and several states have enacted similar laws. We want to get the same type of savings for Colorado, not just to bounce back from this economic recession but to ensure Coloradans get the best deal possible for the money they spend on their prescription drugs.”
“This legislation will make sure that PBMs in Colorado are held accountable for the promises they have made to the state. When we require PBMs to bid against one other over cost for providing our benefits, everyone wins” said Representative Janice Rich (HD 55 - Mesa County). “While this bill will initially apply to proposals the state solicits for state employee prescription plans, we hope that over time county, municipal, and private employers will also be able to take advantage of this reverse auction process."
“We have an opportunity to address the way in which our state contracts with its pharmacy benefit manager,” said Senator Dominick Moreno (SD 21 - Adams County), who was not present for the event. “Colorado could see significant savings from this legislation, which is great for taxpayers, the health of Coloradans, and our state’s bottom line.”
“Health care costs are outrageous for both consumers and business owners, and this policy would significantly lower the cost of doing business in Colorado. It’s the right time for PBM reform and this policy will create savings by introducing competition into the system,” said Senator Barbara Kirkmeyer. “This bill will meaningfully bring down costs and make sure taxpayer money is wisely spent. It brings an innovative, free-market approach that yields significant savings for Colorado taxpayers by creating competition between PBMs and passing the savings through to the consumer and taxpayers.”
The PBM Accountability Project of Colorado is working to educate Coloradans about the role PBMs play in driving up out-of-pocket prescription drug costs and advocate for bipartisan solutions such as the PBM reverse auction that hold PBMs accountable for delivering the value Colorado patients and taxpayers deserve. The coalition is made up of a broad group of organizations, including American Federation of Teachers, Americans for Prosperity, the Bell Policy Center, Colorado AFL-CIO, Colorado Consumer Health Initiative, Colorado Rising Action, Colorado WINS, and Healthier Colorado.
“For years, state employees have watched their pay and benefits drop far below what people in other industries make. This bill would reduce some of that pressure and make sure our public employees are getting the savings they were promised by PBMs,” said Hilary Glasgow, Executive Director of Colorado WINS, the union that represents state employees. “Consumers face an unfair disadvantage as PBMs work behind the scenes to exploit the system to increase their profits, while out-of-pocket costs remain unnecessarily high. The PBM Reverse Auction has the potential to capture millions in savings for the state.”
To learn more about the PBM Accountability Project of Colorado, click here.