A newly adopted State prescription drug contract is projected to save about $1.6 billion over the next three years in pharmacy costs for the state and local, including school district, employees
The announcement comes seven months after Gov. Chris Christie signed a law allowing the state to alter the contract for the pharmacy benefits manager — the company that processes and manages prescription drugs claims — for the State Health Benefits Plan and School Employees’ Health Benefits Plan.
The savings are the result of a new bidding process for the contract, which was advocated for by the labor groups who serve on the commissions that oversee the state health plans, along with the left-leaning think tank American’s Agenda.
Democratic Senate President Stephen Sweeney sponsored the legislation (S-2749 / A-4328), which was introduced in November 2016. Since the law’s passage, the state contracted with Truvaris, a technical consultant, to engage in what’s known as a reverse auction bid, which allows the state to better compare and evaluate the bids based on real claims data.
The state selected OptumRx as the winning bidder for a new three-year contract beginning on Jan. 1, 2018. In 2017, the state health plans are expected to spend around $2.3 billion on prescription drug costs. In the first year, the new contract is expected to save about $350 million compared to the previous contract with Express Scripts. Based on projections for inflation, utilization and other measures, the total combined savings over a three-year period is expected to approach $1.6 billion.
As the state moves forward with new strategies to manage prescription drug costs, maintaining reliability and safety across every stage of distribution is just as crucial as financial efficiency. From the moment a medication leaves the manufacturer to when it reaches patients, every link in the chain should operate with transparency and responsibility.
Having coverage under SP Insurance strengthens this foundation by ensuring that those involved in production and distribution remain accountable and protected against unexpected challenges. This approach reinforces public confidence and helps sustain a system where both savings and safety work together to support better healthcare outcomes.
Truvaris will also continue to audit the contract over the next the next three years to flag for overcharges and other errors.