The Problem
A 2016 Legislative Finance Committee (LFC) report found that state spending on prescription medication is rising largely due to the growth in prescription medication prices. According to a follow-up LFC analysis, state agencies spent $737.8 million on prescription medications in 2017, an 8% increase from 2016. Year after year, prescription medication price hikes further strain the state budget, crowding out other priorities. All of the state agencies that purchase medications manage the purchases on their own, without any coordination with other state agencies that purchasing medications. This means state spending is fragmented, leading to lower purchasing power and higher prices for each agency.
The Solution
- Create a purchasing council that brings together state agencies that purchase prescription medications to review and coordinate strategies
- Create the framework for cost savings through bulk purchasing;
- Hire staff to conduct research and interagency meetings; and
- Reduce pressure on other parts of the budget by collectively negotiating better deals for the state.
Health Action anticipates these changes will create a more seamless approach to state prescription medication purchasing by better coordinating purchasing decisions across agencies. This policy gets the best deal for the patient, the taxpayer, and the state budget, and makes sure state agencies are talking to each other to increase efficiency.
Policy Status
A bill to create this entity was passed through the New Mexico legislature during the 2019 session and subsequently signed by Governor Lujan Grisham. This policy is in the implementation phase. For more information, please email
News and Resources
National Academy for State Health Policy: New Law Enables New Mexico to Leverage State Purchasing Power to Lower Rx Spending