New Rx Contract Saves $540 Million in Taxpayer Dollars
Governor Jon S. Corzine announced this week the state plans to award a new contract that will save New Jersey taxpayers approximately $540 million over the next five years. The contact is for the delivery of pharmacy benefits to active and retired public workers in the State Health Benefits Program (SHBP) and the School Employees Health Benefits Program (SEHBP).
The combined plans cover approximately 800,000 people including active, retired, COBRA individuals and their dependents. Of this number, approximately 670,000 individuals receive prescription coverage under the State plan. In an effort to deliver these benefits at a lower cost to taxpayers, last year, the Corzine Administration directed that the pharmacy benefits be managed directly by the State, starting January 1, 2010.
“Over the last three years, my administration has worked hard to contain the cost of providing public employees and retirees with health care coverage by enacting major plan design changes, asking public employees to contribute more toward their coverage, and giving local governments more tools to manage their costs,” Governor Corzine said. "The pharmacy benefits management contract builds off these other reforms and delivers major savings to state taxpayers.”
Absent this new contract, the aggregate cost of providing pharmacy benefits to covered employees, retirees and dependents over the next five years is projected to be $6.36 billion. Under the contract to be awarded, that cost would be reduced to $5.82 billion, a savings of $540 million over the life of the contract, or $108 million annually. Approximately one-third of the savings would accrue to local governments and school participants in the State health plans.
Following an open and competitive bidding process, an evaluation committee recommended awarding the Pharmacy Benefits Management contract to Medco Health Solutions, Inc., of Franklin Lakes, NJ. Medco submitted the lowest bid, and its proposal received the highest technical score of all responses.
Medco Health Solutions, Inc. was among eight bidders that submitted a proposal to the State. The others were: Aetna Life Insurance, Benecard Prescription Benefits Facilitator, Catalyst Rx, CIGNA, Express Scripts, Inc., Horizon Healthcare Services, and Prime Therapeutics LLC.
Vendors were advised last week of the Intent to Award which is expected to become final after the ten day protest period elapses.
The combined plans cover approximately 800,000 people including active, retired, COBRA individuals and their dependents. Of this number, approximately 670,000 individuals receive prescription coverage under the State plan. In an effort to deliver these benefits at a lower cost to taxpayers, last year, the Corzine Administration directed that the pharmacy benefits be managed directly by the State, starting January 1, 2010.
“Over the last three years, my administration has worked hard to contain the cost of providing public employees and retirees with health care coverage by enacting major plan design changes, asking public employees to contribute more toward their coverage, and giving local governments more tools to manage their costs,” Governor Corzine said. "The pharmacy benefits management contract builds off these other reforms and delivers major savings to state taxpayers.”
Absent this new contract, the aggregate cost of providing pharmacy benefits to covered employees, retirees and dependents over the next five years is projected to be $6.36 billion. Under the contract to be awarded, that cost would be reduced to $5.82 billion, a savings of $540 million over the life of the contract, or $108 million annually. Approximately one-third of the savings would accrue to local governments and school participants in the State health plans.
Following an open and competitive bidding process, an evaluation committee recommended awarding the Pharmacy Benefits Management contract to Medco Health Solutions, Inc., of Franklin Lakes, NJ. Medco submitted the lowest bid, and its proposal received the highest technical score of all responses.
Medco Health Solutions, Inc. was among eight bidders that submitted a proposal to the State. The others were: Aetna Life Insurance, Benecard Prescription Benefits Facilitator, Catalyst Rx, CIGNA, Express Scripts, Inc., Horizon Healthcare Services, and Prime Therapeutics LLC.
Vendors were advised last week of the Intent to Award which is expected to become final after the ten day protest period elapses.
Related Links
- Read the Press Release
