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Senate of Pennsylvania
Session of 2017 - 2018 Regular Session


Posted: March 26, 2018 09:45 AM
From: Senator John H. Eichelberger, Jr.
To: All Senate members
Subject: Modernizing Pharmacy Benefit Manager contracts for the public sector
I plan to introduce legislation in the near future to modernize the process for selecting and monitoring pharmacy benefit manager (PBM) contracts across the Commonwealth. Recently, New Jersey took advantage of emergent technology to reap substantial savings in prescription drug costs for its public employees. It has been widely reported that the savings to New Jersey could reach $1.6 billion dollars over the three year term of its PBM contract.

My legislation would authorize all public sector pharmacy benefit contracting in the Commonwealth to take advantage of the same technology. In selecting a PBM, public sector entities would be able to use a “reverse auction” process, like that used in New Jersey. A “reverse auction” provides complete historical data on all prescription claims covered in the prior year to potential bidders who submit their best prices in a multiple stage bidding process, wherein bids in each stage are analyzed to calculate the actual dollar cost of the submitted drug pricing proposals.

Additionally, once a PBM is retained, the legislation would provide for real-time electronic auditing of the PBM’s invoices throughout the term of the contract. Taking advantage of the available technology would allow the drug plan to conduct a continuous bill review that analyzes every claim for accuracy of pricing and contract terms. Being able to electronically audit each PBM invoice claim-by-claim and line-by-line to flag errors and overcharges above prices that should be charged under the contract before the bills are paid by the state will validate and ensure financial accuracy, and compliance with contract terms. Further, by tracking performance and utilizing real-time insights to improve prescription fill rates and drug adherence, I believe we can also improve patient outcomes for public sector employees.

We can achieve enormous savings without any cuts in public employee benefits and no compromises in the quality of health care for public employees and their families. Please join me in co-sponsoring this very important legislation.

Introduced as SB1166