DENVER, CO– The House today passed bipartisan legislation sponsored by Representatives Susan Lontine and Janice Rich to establish a competitive Pharmacy Benefit Manager (PBM) marketplace, which will lower pharmacy benefit costs for Colorado state government, private employers, and consumers across the state. The bill passed by a vote of 52-11
“By creating a competitive marketplace for pharmacy benefit managers, we can reduce prescription drug costs for Coloradans and save our state money on the prescription drug plans it purchases,” said Rep. Susan Lontine, D-Denver. “This innovative policy is saving other states and consumers millions while increasing transparency. House Democrats have made reducing the cost of prescription drugs and health insurance a top priority, and we’re committed to continuing this progress and saving consumers money on their health care.”
HB21-1237 would establish a competitive marketplace for PBMs. Under the bill, the state would procure a technology platform that would allow PBMs to bid against each other in a reverse auction to secure state and private pharmacy benefit contracts. The state or private employers would then be able to select the lowest bidder. The bill creates a modern and transparent process to secure PBM contracts and allows for an audit of invoices to ensure PBMs are meeting their contract terms and to prevent consumers from overpaying.
PBMs were created to help consumers save money on prescription drugs. However, often the PBMs negotiate discounts, but then keep the savings instead of passing them along to consumers. A reverse auction allows the state or employers to do an apples to apples comparison of each PBM’s pricing proposal. Initial estimates show the state could save between $6.7 million and $10.24 million a year.