New Pharmacy Contract For SEHBP & SHBP Project $1.6B In Saving Over 3 Years

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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.

Truvaris will also continue to audit the contract over the next the next three years to flag for overcharges and other errors.