Will N.J. Reverse Auction Savings Travel to Other States?

August 26

Colorado, Louisiana, New Hampshire and Minnesota have joined New Jersey in requiring PBMs to participate in a reverse auction bidding process to administer the pharmacy benefit for their state employee health plans (SEHPs). Experts say the laws are a useful tool in the larger trend of states trying to control health care costs, though they add that it can’t be the only solution used to tackle to the problem of high drug prices.

Traditionally, when states are looking for a PBM to manage pharmacy benefits for their public employees, they field complex requests for proposals (RFPs) that can be difficult to compare to one another. A reverse auction, on the other hand, requires bidding PBMs to offer the same contract terms — set forth in a drug benefit plan proposed by the state — and to compete solely on price. In 2016, New Jersey was the first state to pass a reverse auction model for its SEHP, and the program launched in 2017.

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Radar on Drug Benefits

Peter Johnson

Peter has worked as a journalist since 2011 and has covered health care since 2020. At AIS Health, Peter covers trends in finance, business and policy that affect the health insurance and pharma sectors. For Health Plan Weekly, he covers all aspects of the U.S. health insurance sector, including employer-sponsored insurance, Medicaid managed care, Medicare Advantage and the Affordable Care Act individual marketplaces. In Radar on Drug Benefits, Peter covers the operations of (and conflicts between) pharmacy benefit managers and pharmaceutical manufacturers, with a particular focus on pricing dynamics and market access. Before joining AIS Health, Peter covered transportation, public safety and local government for various outlets in Seattle, his hometown and current place of residence. He graduated with a B.A. from Colby College.