Last year, New Jersey awarded pharmacy benefit manager OptumRx a $6.7 billion contract to oversee prescription drug benefits for the state's 835,000 public employees, retirees and dependents. But now New Jersey has to redo the process after a court said OptumRx "improperly hedged" its contract.
The big picture: There's reason to believe this type of financial hedging exists in most contracts involving the big PBMs.
Driving the news: The New Jersey court faulted OptumRx for inserting a clause that would have guaranteed the PBM's profits by giving it the right to "modify financial contracted terms" if the state tinkered with drug benefits — for example, if the state altered how specialty medications are covered.
Between the lines: This is like saying you'll sell your house for $200,000, but that price could go up if certain events happen. No buyer would agree to that.
Go deeper: According to a contract template Axios obtained earlier this year, Express Scripts has the right to change "rates, administrative fees and/or rebates, solely as necessary to return (Express Scripts) to its contracted economic position" if the following events with their employer clients occur:
Translation: Express Scripts could potentially overhaul its drug pricing contracts if employers recruit too many women, or if rebate dollars decrease unexpectedly.
The bottom line: These are large, complicated drug contracts. Dominant PBMs craft the deals in ways that will always be in their interests.
