Damon responds to Sondra Stratton's 9/26/06 inquiry on what STRS is doing currently to reduce 2008 HC costs

From Damon Asbury to Sondra Stratton, October 6, 2006

Subject: RE: Hc for 2008 [In response to Sondra's letter posted 9/26/06]

Sondra:

In a recent Board News, there was an article that described a joint project of STRS Ohio and the Ohio Public Employees Retirement System. A copy of the article is attached below. As you know, STRS Ohio spends nearly a half billion dollars a year on health care expenses for 114,000 enrollees in the program. Staff is working hard to get the best available discounts on services. This promises to be a significant approach to controlling prescription costs, as is our on-going effort to work with the federal offices of Medicare for our Part D reimbursement. At present, it appears that we will receive over $35 million annually from this effort and that will help to both preserve the Health Care Stabilization Fund and keep costs lower.

Damon

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Pharmacy Benefit Consultant Selection Under Way

STRS Ohio, in conjunction with the Ohio Public Employees Retirement System (OPERS), conducted a Request for Proposal for a pharmacy benefits manager consultant. The purpose is to engage a consultant to evaluate both traditional pharmacy benefits manager (PBM) purchasing models as well the viability of alternative PBM models. The current PBM contracts for both systems end Dec. 31, 2007. Eight consulting firms responded with proposals and STRS Ohio and OPERS staff narrowed the field to three finalists. Staff members interviewed the finalists to assess the capabilities of each organization Aug. 29–30. During the next few weeks, staffs at both retirement systems will select a consultant and finalize terms of engagement. By working with OPERS, STRS Ohio can maximize its purchasing power and share expertise. Collectively, STRS Ohio and OPERS represent about 300,000 lives and more than $650 million in gross drug spend annually. This project began months ago with discussions among all of the Ohio retirement systems, the Department of Administrative Services and The Ohio State University to explore concepts around better approaches to prescription drugs. However, only STRS Ohio and OPERS were able to move forward with the current project.