‘Bureaucratic inertia’: Delaware lawmaker says state board should pursue more aggressive reforms to drive down employee drug prices

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A Delaware lawmaker is firing back at state officials who argue they’re unable to make the process for negotiating drug benefits for state employees and retirees more transparent.

The General Assembly unanimously passed a resolution in 2025, sponsored by state Sen. Ray Seigfried, D-Claymont, that required the State Employee Benefits Committee to examine ways to revamp how the state negotiates drug prices with pharmacy benefit managers, or PBMs, and report back.

The state of Delaware uses PBMs, which are the middlemen between employers and pharmaceutical companies, to provide services that include bargaining for discounts from manufacturers, managing pharmacy claims and designing benefit plans.

The state’s Group Health Insurance Plan covers over 135,000 state employees, educators, law enforcement officers, retirees and their families. According to a financial presentation during the July SEBC meeting, the plan was projected to be nearly $1.6 billion for fiscal year 2027.

Seigfried, a former ChristianaCare executive, said the state could save tens of millions of dollars by addressing hidden costs built into the health care supply chain.

The 2025 resolution calls for more aggressive pharmaceutical purchasing reforms, such as requiring PBMs to supply the state with more pricing data, information about rebates and contracts signed with drug manufacturers.

“We as a state shouldn’t be at the mercy of a PBM telling us and informing us what and when we should purchase,” he said. “It should be the other way around.”

But the SEBC’s recent report said that while it has incorporated many of the ideas from the resolution into the current bid process for a new PBM, it was constrained from implementing some of its bolder concepts. The report argued that pushing too hard for transparency could potentially raise prices or endanger the state’s current drug rebates.

“The report identifies limitations in the current PBM marketplace, including proprietary systems, confidentiality provisions, manufacturer agreements, and restrictions on the use and disclosure of certain pricing information,” Delaware Surgeon General and SEBC Chair Neil Hockstein said in an email to WHYY News. “Those are issues the state must address to achieve greater data transparency.”

The report also said that the current procurement process hampered its ability to implement some of the resolution’s ideas and detail the results of the strategies it had put into place.

Seigfried countered that the SEBC report was a blueprint for “bureaucratic inertia.” He said that proprietary data and trade-secret claims should not be excuses to maintain the status quo.

“I want us to own the information,” Seigfried told WHYY News. “I want us to understand the information. I want us to be able to do an analysis of that data and negotiate appropriately to keep [the] price down.”

PBMs have been criticized over the past several years for lacking competition and transparency, drawing reform efforts at the state and federal level. In 2024, the U.S. House Committee on Oversight and Accountability called the nation’s three largest PBMs — CVS Caremark, Express Scripts and OptumRx — monopolies that are working together to keep prescription drug prices high, undermine community pharmacies and harm patients.

Delaware Attorney General Kathy Jennings sued those three PBMs, along with the three largest insulin manufacturers, alleging a conspiracy to increase the drug’s price by as much as 1,000% over the past 15 years. It’s currently consolidated with similar cases in the U.S. District Court of New Jersey.

Congress enacted federal PBM reforms earlier this year to improve transparency. Changes include requiring the companies to provide employer health plans with detailed, semiannual reports on net drug spending, rebates and “spread pricing” arrangements, which is when a PBM bills an employer for a higher price than it actually pays for the medication and then keeps the difference.

Seigfried said he is considering several pieces of legislation that lawmakers could take up next year. He argues Delaware could save tens of millions of dollars by following in the footsteps of New Jersey and Montana.

New Jersey passed legislation in 2016 that allowed the state to share bid information to encourage more competitive offers. Montana shifted to a pass-through model, which eliminated spread pricing and returned 100% of manufacturer rebates directly to the plan.