DENVER, CO– The House Health and Insurance Committee today passed 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 11-2.
“This bill is a win win–it will save consumers money on their prescription drug costs and save Colorado money, too,” said Health and Insurance Committee Chair Rep. Susan Lontine, D-Denver. “Using innovative technology, we can create a marketplace for pharmacy benefit managers that gets them to compete against each other to offer their services at a lower cost. House Democrats have made reducing the cost of prescription drugs and insurance a top priority, and this bill will help our state reduce costs while saving people money on their drugs.”
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.