Sweeney Recommends NJ’s PBM Initiative to Maryland Legislature

Senate President testifies before House of Delegates showing how NJ will save over $2.5 billion through ‘reverse auction’ technology

Annapolis – Senate President Steve Sweeney today recommended New Jersey’s Pharmacy Benefits Manager (PBM) initiative to Maryland legislators who are seeking health care cost savings similar to New Jersey, noting that the Garden State will save over $2.5 billion through its reverse auction program.

Senator Sweeney, who sponsored New Jersey’s PBM legislation, spoke before the Maryland House Health and Government Operations Committee of the House of Delegates, which is considering legislation, HB1150, the State Health and Welfare Benefits Program – Maryland Competitive Pharmacy Benefits Manager Marketplace Act, modeled directly on New Jersey’s plan.

“The innovation to prescription drug purchasing we adopted features an online auction, powered by a cutting-edge, ‘big data’ analytics technology platform, to create a dynamic, truly competitive marketplace in which PBMs bid and counter-bid against one another to win the state’s business. Think of it as an ‘eBay’ for PBMs,” Senator Sweeney said in his testimony.

Senator Sweeney noted that the New Jersey model created “a competitive marketplace in which PBMs compete in a transparent, online auction” for the right to sell prescription drugs to the state at the lowest cost.

State government was able to use the same technology platform to conduct ongoing, automated and very fast review of prescription drug claims invoices, enabling the state to flag any overcharges within a few hours of invoice submission.

While original projections forecast PBM reverse auction savings of $1.6 billion over three years, the ultimate savings proved higher, Senator Sweeney pointed out.

“In September 2018, just 9 months into the first plan year under the new pharmacy benefits contract awarded through our PBM reverse auction, Governor Phil Murphy reported that the our technology-enabled PBM selection and accountability process had  reduced pharmacy costs for state and local governments by over 25 percent.”

Active school employee members will see a sizable difference in their premiums for Plan Year 2019 with rates decreasing by 1.1 percent – in stark contrast to the 13 percent increase they saw last year – even before introduction of the new changes.

The Senate President praised his Senate and Assembly colleagues, leaders of the state’s public employee unions, America’s Agenda and officials in the previous Administration who partnered with him to make the PBM program savings a reality for over 750,000 public employees and family members.

Senator Sweeney offered to assist the Maryland legislators in implementing the New Jersey model.

$2.5 Billion Savings over 5 years (2)
Sweeney Testimony Chairwoman Pendergrass & Members of Maryland House Health & Government Operations Cmte Feb 27, 2020