Laughlin to Introduce PBM Reverse Auction Legislation

HARRISBURG – Looking to produce savings within the state’s Medicaid prescription drug program, Sen. Dan Laughlin will be introducing legislation to have the state hold a reverse auction for a pharmacy benefit manager (PBM).

“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,” said Sen. Laughlin. “Reverse auctions are commonly used in the public sector procurement process and generally known for their potential to generate significant savings.”

The auction starts with an opening amount and allows qualified bidders to counteroffer lower prices until a bid is accepted.  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’s PBM reverse auction has produced, to date, savings of more than $2.5 billion. In Connecticut, the state’s recent PBM reverse auction included not only pricing, but also technical responses and helped the state achieve significant cost savings, of approximately 10%, as well as increased transparency within Connecticut’s PBM contract.

“The technology is available to provide transparency in both the bidding and implementation of the PBM contract to ensure taxpayers that Pennsylvania’s Medicaid program utilizes the most competitive drug prices, helping to achieve substantial savings without compromising health care quality,” said Sen. Laughlin.

Contacts: Matt Azeles 717.787.8927


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