New Jersey’s Prescription Drug Affordability and Transparency Law is comprised of three separate bills, all of which took effect January 1, 2025. Senate Bill 1614 (“S1614”) took effect on February 1, 2024, Senate Bill 1615 (“S1615”) took effect on August 1, 2024, and Bill A-536/2841 (“A536”) took effect on January 1, 2025. These bills, which form the Prescription Drug Affordability and Transparency Law in New Jersey, are aimed to advance prescription drug affordability and establish oversight of Pharmacy Benefit Managers (PBMs) in New Jersey.
S1615 and A536 benefit independent pharmacies in New Jersey by mandating greater financial transparency from PBMs and attempting to curb unfair business practices that have favored PBMs and their affiliated pharmacies, often to the detriment of independent pharmacies. Additionally, S1614 supports New Jersey patients by implementing a “flat cap” on out-of-pocket expenses for essential emergency medications such as EpiPens, asthma inhalers, and insulin.
More specifically, S1615 establishes a new framework for gathering, analyzing, and reporting data on drug pricing, as well as on drug manufacturers, insurance carriers, and the supply chain within New Jersey. Additionally, S1615 enhances transparency in drug pricing throughout the supply chain and fosters greater competition in the market. Within 60 days of an annual request from the Division of Consumer Affairs in the Department of Law and Public Safety (“Division”), PBMs are required to produce the requested data. Once the Division compiles the data, it will publish an annual report and hold a public hearing on the findings. S1615 provides 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
- Total net income received in the last calendar year for each drug and drug group.
A536 also increases oversight of PBM business practices in New Jersey by regulating several PBM business practices with the implementation of stricter standards for:
- The Maximum Allowable Cost (“MAC”) for multiple source generic drugs;
- The use of spread pricing in PBM compensation models and pharmacy reimbursement; and
- Transparency in PBM contracts with pharmacies.
Additionally, starting in 2025, PBMs are required to obtain a license from the New Jersey Department of Banking and Insurance to conduct business in the state.
The aim of these laws is to reduce the negative impact PBMs have on drug pricing. S1615 and A536 establish new transparency requirements for PBM operations and provide pharmacies with stronger legal means to contest unfair PBM practices in New Jersey. These laws are important for New Jersey pharmacies to become aware of. PBMs’ unjust business practices are forcing numerous independent pharmacies throughout the state to close their doors. New Jersey’s current set of laws provide independent pharmacies with valuable tools to help combat against the rise of PBM affiliated pharmacies.
How Frier Levitt Can Help
Frier Levitt represents numerous pharmacies across the United States assisting them in challenging PBM audits, network access, reimbursement practices (including DIR fees and MAC reimbursement) and providing extensive knowledge on all aspects of the pharmacy-PBM relationship. Contact us to speak with an attorney about how your pharmacy can leverage the various laws and protections afforded to pharmacies, including New Jersey’s PBM laws.
