Done Right, Colorado Can Save Millions on Health Care |  OPINION

Done Right, Colorado Can Save Millions on Health Care | OPINION


Dominique Moreno


janice rich

Governor Jared Polis recently presented his preliminary annual budget proposal for the next fiscal year. Early estimates say Colorado will face tough decisions as one-time federal funds run out, the economic outlook deteriorates and inflation rises. One of the fastest rising costs for Colorado families is easily the cost of health care – especially the cost of prescription drugs, which has risen three times faster than inflation over the past 10 years. .

However, thanks to bipartisan legislation we sponsored in 2021, there are silver linings and opportunities for incredible savings. House Bill 1237, The Competitive Pharmacy Benefits Manager Marketplace Act, modernizes how the state purchases prescription drugs and creates an opportunity for Colorado to save millions of dollars in savings on prescription drugs. These savings alone could prevent major cuts to important public services.

Most people have never heard of Pharmacy Benefit Managers (PBMs), which are intermediary companies that negotiate prescription drug prices on behalf of health insurance plans. In this role, PBMs ultimately determine what Coloradans will pay for the prescription drugs they need. PBMs are expected to negotiate discounts on prescription drugs and pass those savings on to consumers. Unfortunately, the drug supply chain is riddled with misalignments that cause PBMs to keep drug prices high in order to extract high profit margins, while Colorado patients, local pharmacies, health plans employee health and the state face rising drug costs.

To address this issue, House Bill 21-1237 creates a new competitive PBM reverse auction process to obtain the lowest possible prices for selected PBM to administer prescription benefits for Colorado state employees and their families. . This transparent online marketplace – think eBay for prescription drug benefits – forces PBMs to bid lower and lower over several rounds of transparent bidding as PBMs compete to win the drug contract. the state for the supply of prescription drugs.

By creating an online marketplace where PBMs are required to compete transparently, Colorado can lower out-of-pocket costs for prescription drugs, hold PBMs accountable, and save Colorado millions of health care dollars. . In fact, an early analysis of the data suggests that Colorado could save between $6 million and $10 million a year in drug costs without any cuts in benefits for state employees. Additionally, Colorado’s PBM Reverse Auction for State Employees provides a platform that, if successfully implemented, could be expanded to provide private sector employers and working families across Colorado. relief from rising prescription drug prices.

This innovative and modern prescription drug cost reduction strategy has been leveraged in other states that have passed similar legislation. New Jersey saved $2.5 billion in prescription drug costs by conducting two successive reverse PBM auctions. This summer, a PBM reverse auction led by Minnesota, which has a population similar to Colorado, will save $130 million in prescription drug costs over the next two years. This represents a whopping 27% savings over the prescription drug contract of their former state and local government employees.

One of the most important lessons we’ve learned from states like Minnesota and New Jersey that have successfully conducted reverse auctions is that the PBM reverse auction is successful in reducing prescription drug spending. only when conducted transparently. State managers and beneficiary employees must work together as partners and common stakeholders to carry out a PBM reverse auction process. If Colorado heeds this lesson, Coloradons could save millions of taxpayer dollars while reducing costs for beneficiaries covered by state health programs.

Through a timely and well-managed PBM reverse auction process, conducted with true transparency and partnership, all Coloradans can win. Reducing the cost of prescription drugs provides Colorado with the biggest opportunity we have this year to save real money for the people of our state. Taxpayers will save. State employees will save. Our state government will save. In a year filled with a bleak fiscal outlook and potential cuts to public programs, Colorado could create a fiscal bright spot with this PBM reverse auction — if done right.

Majority Leader Sen. Dominick Moreno is a Democrat representing Commerce City. Senator Janice Rich is a Republican representing Grand Junction.

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