New Jersey court rips up Optum's $6.7B prescription drug contract, orders rebid

Gavel court room lawsuit judge
A New Jersey court has found that OptumRx's proposal to serve as PBM for 835,000 public workers violated bidding rules. (Pixabay)

A New Jersey appeals court has invalidated OptumRx's $6.7 billion prescription drug management contract with the state, ruling the company violated bidding rules. 

A three-judge panel ruled (PDF) last week that the company's bid to be the next pharmacy benefit manager for New Jersey's 835,000 public workers broke bidding rules, and ordered a rebid for the contract. 

The company's proposal included a provision to adjust its pricing based on certain benefit plan changes, which violated bidding specifications and gave the UnitedHealth Group-owned company "a clear competitive advantage over the other potential bidders," according to the panel.

OptumRx's proposal, "permitted it to 'hedge' its bid, thereby reducing its financial risk from adverse Plan Design changes," the court said. "That set it apart from the other bidders who agreed to be bound by all of the terms of the Bid Solicitation."

New Jersey's prescription drug plans are self-insured and the state uses a PBM to manage the plans and their costs. Last year, in an online reverse auction, OptumRx beat out Caremark PCS Health LLC and Express Scripts for the three-year contract, which was slated to start Jan. 1.

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But Express Scripts, which was the incumbent PBM for the state, filed an appeal and request for a stay in December which the court granted. The stay was later reversed following a motion for reconsideration by the then-Christie administration.

A spokeswoman for Express Scripts told FierceHealthcare the company "is encouraged by the decision and looks forward to the opportunity to participate in the rebidding process."

OptumRx did not immediately return FierceHealthcare's request for comment.