As state officials investigate reducing costs by leveraging their collective buying power to purchase prescription drugs, the National Academy for State Health Policy (NASHP) has developed a Checklist for Coordinating Public Purchasing of Prescription Drugs to help states establish baseline data across public purchasers and identify effective strategies to coordinate purchasing.

The checklist is designed to help states gather data on purchasers’ contract terms with pharmacy benefit managers (PBMs), how much is spent on drugs based on net cost and utilization, and plan benefit design.

Following California’s leading effort to implement bulk purchasing across state agencies, New Mexico, Delaware, and Minnesota have established interagency work groups of public purchasers, including those representing state government, state university, and public school employees and retirees as well as departments of corrections, state hospitals, and Medicaid programs. 

These groups’ early meetings have focused on understanding current drug spending and plan design across purchasers. To help guide this work, NASHP’s checklist captures important information about these plans’ contracts with PBMs, including contract expiration dates and the inclusion of transparency provisions that:

• Prohibit spread pricing – when a PBM pays a pharmacy a lower rate than the rate the PBM claims for reimbursement from the health plan; or
•  Require rebates to be passed through to the plan.

Once this data is established, interagency groups can identify cost and contract variations and explore various opportunities, including aligning PBM contracts across payers, which creates the potential to pool prescription drug purchasing to achieve savings.

NASHP’s checklist also asks purchasers to identify the 10 drugs with the highest net cost to health plans and the 10 most frequently prescribed drugs. Understanding the highest cost and highest use drugs across purchasers can guide the work of interagency groups, allowing them to prioritize efforts around specific drugs. 

Interagency purchasing groups in New Mexico and Delaware have identified high-cost specialty drugs, such as Humira, as a major cost driver and a growing area of concern for public purchasers. Armed with this data, states working to leverage their purchasing power may be better positioned to respond to future drug spikes and the high cost of specialty drugs.

NASHP continues to develop model policies to help states address drug costs. See its latest proposal for a state purchasing pool for prescription drugs, which would allow individuals and businesses to join a public drug plan, increase the size of the state purchasing pools, and secure lower costs. Learn more about Delaware and New Mexico‘s leveraging efforts in these NASHP blogs.