Governor Signs PBM Legislation

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Gov. Chris Christie signed legislation, S-2749 (Sweeney) / A-4328 (Prieto), November 21 that will alter the contract for the pharmacy benefits manager – the company that processes and manages prescription drugs claims – for the state health plans for educators and public workers.

The bill would require the State to procure, in an expedited manner, professional services contracts for:

  • technical assistance to evaluate the qualifications of bidders on a PBM procurement and online automated reverse auction services to support comparison of the pricing for PBM procurement;
  • real-time, electronic, line-by-line, claim-by-claim review of invoiced PBM pharmacy claims using an automated claims adjudication technology platform that allows for online comparison of PBM invoices and auditing of other aspects of the services provided by the PBM; and
  • a PBM for the State Health Benefits Plan or the School Employees’ Health Benefits Plan.

The legislation was backed by public employee unions.  It directs the Division of Purchase and Property in the state treasury department to procure a pharmacy benefits manager contract “in an expedited process” that includes “reverse auction” bidding, technology that allows for competitive bidding on drug prices in real time.

According to one of the bill’s sponsors, the new approach could save $200 million a year, which would be split among state, county and local governments and employees.

In June, the State Health Benefits Program Commission approved a two-year extension of the current contract with Express Scripts.  The treasury department in November 2015 issued a request for proposals for a new pharmacy benefits manager, but the RFP was canceled in May and applicants were informed their bids were “non-responsive.”