Chris Christie: Taxpayers can pay less for prescription drugs

For the Monitor
Published: 2/24/2020 6:00:16 AM

As a candidate for president in the New Hampshire primary four years ago, I saw first-hand that the people of New Hampshire look for real solutions, ones that save taxpayers money, for complex issues like prescription drug costs.

Granite Staters look past political slogans and superficial proposals, preferring straight talk and honest, effective policies.

Even as many of this year’s candidates for president proclaim unrealistic and ineffective platforms on prescription drugs, a serious, bipartisan proposal is being considered in the New Hampshire Legislature that would significantly reduce prescription drug costs for patients, public employees and taxpayers.

The proposal, introduced as an amendment to Senate Bill 686 by Democratic Sen. Cindy Rosenwald and Republican Sen. Bob Giuda, is modeled after a successful program we enacted while I was governor of New Jersey, which is saving taxpayers $2.5 billion over five years – approximately $500 million every year.

Before this important reform, New Jersey taxpayers and health plan enrollees were spending more than $2 billion a year on prescription drugs for state and local workers, teachers, their dependents and retirees. It was an escalating outlay that was making it increasingly difficult for us to devote public funds to important priorities, such as reducing taxes, improving schools and repairing infrastructure.

And even with the taxpayers footing such a sizeable bill, the plan’s enrollees were still telling us that they were paying too much for their medicines at the pharmacy counter. Clearly, this was a worsening problem in search of an effective solution, just as the New Hampshire Legislature is wrestling with the same challenges today.

At the core of New Jersey’s dilemma stood the pharmacy benefit manager (PBM) for its public employee health plan. A PBM is a prescription drug middleman that buys drugs at negotiated prices from pharmaceutical companies and resells them to the health plan. PBMs also set reimbursement rates to pharmacists for dispensing the drugs.

The problem is that PBMs keep a large part of the savings from these transactions and don’t pass them on to the taxpayers or to patients in lower costs at the pharmacy.

Here’s how we fixed the problem with overwhelming bipartisan support and why it presents an opportunity for New Hampshire, a state renowned for its fiscal responsibility and for the value its people place on straight talk and honest solutions.

First, we addressed these problems head on by drafting our own best-in-class PBM contract. Then we created an online marketplace called a “PBM reverse auction,” in which PBMs would bid competitively to win our business. And we used 21st century data analytics technology to evaluate complex PBM bids and calculate the costs of each PBM’s bid in order to maximize taxpayer savings.

We conducted the PBM reverse auction online and in a visible manner, allowing the competing PBMs to see the costs of one another’s bids. That way, PBMs could calculate how much further they would have to reduce prescription drug prices to win the state contract. We saw, in real time, how competition compelled PBMs to reduce their drug pricing proposals over multiple rounds of bidding.

The real winners of our PBM reverse auction were taxpayers, public employees and patients. As a member of the New Jersey State Health Benefits Commission testified to the New Hampshire Senate Commerce Committee earlier this month, prescription drug spending by the New Jersey public employee health plan fell by a remarkable 25% in the first year of the new PBM contract without any reduction to state and local employee prescription drug benefits.

And, very importantly, state and local employees, teachers, retirees and their families saw the cost of their prescriptions reduced at the pharmacy counter.

And there’s more. In order to hold the PBM that won the reverse auction accountable for delivering the promised savings, my administration used the same state-of-the-art data analytics technology that calculated the cost of each PBM’s bid to also conduct an ongoing, automated review of 100% of prescription drug claims to confirm their accuracy.

Using this technology, we were able to identify and flag PBM billing errors within a few hours after the PBM’s submission of each invoice. During the two years following our first reverse auction, New Jersey identified and recovered $48 million in PBM overcharges.

New Hampshire need not remain at the mercy of opaque PBM business practices or indecipherable PBM pricing schemes, syphoning taxpayer dollars away from other priorities. Instead, in keeping with its longstanding reputation as a national leader in fiscal responsibility, New Hampshire can embrace an innovative model to reduce prescription drug costs that other states should rush to emulate.

(Chris Christie served as the 55th governor of New Jersey.)




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