Lagana Bill to Require Re-bid of Pharmacy Benefits Manager Contract Clears Senate Budget Committee

Expediting new contract overseeing pharmaceutical benefit payments will save millions of dollars a month

TRENTON – Legislation authored by Senator Joseph Lagana that would require the state Treasury Department to quickly re-bid the existing Pharmacy Benefits Manager (PBM) contract cleared the Senate Budget and Appropriations Committee by a 13-0 vote yesterday.

The bill, which complies with the mandates of an Appellate Division ruling earlier this year, mandates that Treasury use the same reverse auction procurement technology that allowed the state to save hundreds of millions on the last PBM contract. In 2017, New Jersey saved 18 percent, or nearly $2 billion over three years, on its pharmacy benefits contract.

“We need to move forward with the re-bid of our PBM services contract as mandated by the court as soon as possible,” said Senator Lagana (D-Bergen).  “We believe that if we employ the innovative reverse auction procurement method that we used for the previous contract, we will realize additional savings in excess of the amounts we saved through the existing contact.  We must move quickly because the state is losing millions each week without a new pharmacy benefits contract.”

The bill, S-3074, requires the state to undertake the expedited procurement of professional services contracts for a reverse auction procurement platform, technical assistance to the state to evaluate the qualifications of bidders on a PBM procurement, and automated, real-time, electronic, line-by-line, claim-by-claim review of invoiced PBM prescription drug claims.  It also requires that the Treasury procure a new Pharmacy Benefits Manager for the State Health Benefits Plan and the School Employees’ Health Benefits Plan.

The bill would require the reverse auction process and award of a contract to a PBM to be completed by January 15, 2019.