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Colorado Set to Save Millions on Healthcare Costs with Selection of New PBM

DPA recently selected a new PBM through competitive process created by a 2021 bipartisan bill

DENVER, CO - The Colorado Department of Personnel and Administration (DPA) has selected a new Pharmacy Benefit Manager (PBM) for the state, MedImpact, as the result of a transparent and dynamically competitive reverse auction procurement process. With the award of a new PBM contract, the state will save millions of taxpayer dollars without reducing drug benefits for public sector employees and retirees, advancing the Governor’s commitment to help save Coloradans money on healthcare.

PBM corporations manage prescription drug benefits for public and private health plans, negotiating rebates with drug manufacturers with the original promise of lowering the state’s cost for prescription drugs. However, several investigations across the country have identified that the savings PBMs secure are rarely translated into lower costs for medicines for state employees and taxpayers. PBMs meanwhile continue to profit from their business with states in which they face little to no competition.

In 2021, the bipartisan Competitive Pharmacy Benefits Manager Marketplace Act (House Bill 1237) was passed to create a unique reverse auction process that required PBMs competing to win award of a state prescription benefits contract to attempt to underbid one another over multiple rounds of transparent, competitive bidding. When the legislation was enacted, bill sponsor and chair of the Joint Budget Committee Senator Dominick Moreno explained, “This will generate millions in savings for our state at a time when we need it most.” Co-sponsor Senator Barbara Kirkmeyer added that this brought, “a private sector solution to state government so we can save taxpayers money.” Today, the state’s modernized PBM procurement process has fulfilled its promise for Coloradans, preserving prescription drug benefits for state employees, while saving money for Colorado taxpayers.

The state’s incumbent PBM, OptumRx, protested the selection, which is not uncommon when a state chooses a new vendor. OptumRx has won previous reverse auctions in other states, using the same process.

To learn more about the PBM reverse auction process, click here.


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