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05/28/2024 09:41 PM
Pennsylvania State Senate
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Senate of Pennsylvania
Session of 2021 - 2022 Regular Session


Posted: February 1, 2022 11:59 AM
From: Senator Daniel Laughlin
To: All Senate members
Subject: PBM Reverse Auction
I will be introducing legislation to generate significant savings through a state-held reverse auction for a pharmacy benefit manager (PBM). This legislation will look specifically at state funded health benefit plans, i.e. Medicaid.
A PBM reverse auction is a competitive, online bidding process a state uses to select an entity to manage the state’s prescription drug program. The auction starts with an opening amount and allows qualified bidders to counteroffer lower prices until a bid is accepted.  Reverse auctions are commonly used in the public sector procurement process and generally known for their potential to generate significant savings.

Currently, New Jersey, New Hampshire and Maryland have implemented PBM reverse auction legislation. Ohio recently included language in their state budget bill allowing their Medicaid Department to pursue reverse auctions as well. 

New Jersey enacted legislation in 2016 directing the state to conduct a PBM reverse auction. As a result of the auction, the state anticipates saving over $2.5 billion by 2022.
In Connecticut, the Office of the State Comptroller used a reverse auction process for several recent requests for proposal (RFPs), including a PBM RFP. According to office representatives, “Our reverse auction included not only pricing but also technical responses and helped us achieve both significant cost savings (approximately 10%) and increased transparency in our PBM contract.”

Please join me in sponsoring this important piece of legislation.

Introduced as SB1231