On February 14, 2022, New Jersey Governor Phil Murphy and his legislative partners introduced Senate Bill 1614 (S1614), Senate Bill 1615 (S1615) and Senate Bill 1616 (S1616) with the objectives of advancing prescription drug affordability and establishing much needed oversight of pharmacy benefit managers (PBMs) in the State of New Jersey. If enacted, S1615 and S1616 would provide significant benefits for independent pharmacies in New Jersey as the Bills would require PBMs to be more transparent with their financial data while also limiting unfair PBM business practices.
S1614 is designed to place a flat cap on patients’ out-of-pocket costs for certain emergency drugs like Epi Pens, asthma inhalers and insulin.
Under S1615, a new system would be created to collect, analyze and report any data regarding drug pricing and drug chains, manufacturers and insurance carriers. S1615 would increase drug pricing transparency across the supply chain and build competitive action across the market as PBMs would report its data to the Department of Law and Public Safety so that there is more transparency in the PBM industry. Once the Department compiles the data, it will publish an annual report and hold a public hearing on the findings. S1615 proposes the following data reporting requirements for PBMs:
- Minimum and maximum wholesale acquisition costs (WAC) for each drug and drug group a PBM negotiated with the manufacturer;
- Volume in WAC units of each indicated drug and drug group that a PBM negotiated with the manufacturer;
- Total rebates, discounts, and price concession the PBM received from the manufacturer;
- Total discounts, dispensing fees and other fees negotiated with pharmacies, pharmacy drug networks, or pharmacy services administrative organizations; and
- The total net income received in the last calendar year for each drug and drug group.
Notably, S1616 would increase oversight of PBM business practices in New Jersey and would regulate a variety of PBM business practices by setting stricter standards for:
- The Maximum Allowable Cost (MAC) for multiple source generic drugs;
- The practice of spread pricing and working to prevent spread pricing; and
- Transparency in PBM contracts with pharmacies.
In addition, through this bill, independent pharmacies would be provided enhanced administrative appeal procedures to challenge the MAC for specified drugs.
These bills are designed to limit PBMs’ role in creating negative downstream effects on drug pricing. To the benefit of New Jersey independent pharmacies, S1615 and S1616 would set new transparency standards for PBM business practices and provide pharmacies with other legal tools to challenge improper PBM practices in New Jersey. All the bills have to be passed by both houses of the Senate and Assembly before Governor Murphy can sign them into law.
How Frier Levitt Can Help
Frier Levitt represents numerous pharmacies across the United States in challenging PBM audits, network access, reimbursement practices and has extensive knowledge on all aspects of the pharmacy-PBM relationship. Contact us today to speak with an attorney about how your pharmacy can leverage the various laws and protections afforded to pharmacies, including New Jersey’s current PBM laws in addition to federal laws which regulate PBM conduct.
