Colorado, Louisiana, New Hampshire and Minnesota have joined New Jersey in requiring PBMs to participate in a reverse auction bidding process to administer the pharmacy benefit for their state employee health plans (SEHPs). Experts say the laws are a useful tool in the larger trend of states trying to control health care costs, though they add that it can’t be the only solution used to tackle to the problem of high drug prices.

Traditionally, when states are looking for a PBM to manage pharmacy benefits for their public employees, they field complex requests for proposals (RFPs) that can be difficult to compare to one another. A reverse auction, on the other hand, requires bidding PBMs to offer the same contract terms — set forth in a drug benefit plan proposed by the state — and to compete solely on price. In 2016, New Jersey was the first state to pass a reverse auction model for its SEHP, and the program launched in 2017.

The reverse auction program was projected in 2020 to save $2.5 billion in prescription drug spending between 2017 and 2022, according to the National Academy for State Health Policy (NASHP), which developed model reverse auction legislation. In addition to the five states that have passed explicit reverse auction legislation, Maryland and Oregon have created Prescription Drug Affordability Boards that have the ability to study and implement reverse auction programs.

Unlock the full version of this article by subscribing.

Log in | Learn More