New Jersey’s proposed Senate Bill 4693 (S-4693) (the “Protecting New Jersey from Predatory Drug Pricing Act”)[1] would bar pharmacy benefit managers (PBMs) from obtaining permits to operate pharmacies in New Jersey, with the goal of lowering prescription drug costs and addressing the conflicts of interest that may arise when patients are steered to PBM-owned or affiliated pharmacies.[2] As introduced, however, S-4693 contains potential gaps that could leave the largest PBMs and their affiliated pharmacies largely unaffected, meaning independent pharmacies and patients may see little relief unless lawmakers amend the legislation.
Key Takeaways
- As drafted, S-4693 may leave large, vertically integrated PBMs unaffected because its effective-date language creates uncertainty about whether it applies to PBMs licensed before enactment, and it bars obtaining a new pharmacy permit without prohibiting the ownership or operation of pharmacies PBMs already control.
- S-4693’s prohibition on obtaining new pharmacy permits applies only to the licensed PBM entity, so a pharmacy owned by the PBM’s parent or sister company could potentially retain existing permits and obtain new permits without violating the proposed prohibition.
- Related legislation, S-4692, would require PBMs to pay electronic clean claims within seven to 14 days and paper claims within 30 days, with a 12% per-month penalty on late payments.
- With both bills newly introduced, pharmacies and other stakeholders have an opportunity to advocate for amendments before the bills advance.
New Jersey Senators Introduce S-4692 and S-4693 to Regulate PBMs
On October 1, 2026, New Jersey lawmakers introduced two bills targeting PBMs doing business in the state, S-4693 and a companion prompt-pay bill, S-4692. The sponsors acted out of concern that vertical integration allows PBMs to operate at nearly every level of a transaction, acting simultaneously as the insurer, the pharmacy, and the prescription drug middleman.[3] Although PBMs maintain that their services help reduce prescription drug costs for patients, lawmakers cite findings that the largest PBMs paid their affiliated pharmacies more than unaffiliated pharmacies for certain specialty generic drugs.[4]
As written, the bills would establish the following requirements:
- S-4692 would require PBMs to pay electronic clean claims within seven to 14 days and paper claims within 30 days, and would impose a 12%-per-month penalty on late payments.[5]
- S-4693 contains two sections. Section 1 would prohibit licensed PBMs from obtaining pharmacy permits,[6] and Section 2 makes the act effective immediately upon enactment.
Potential Gaps in S-4693’s Pharmacy Ownership Restrictions
S-4693 contains two potential limitations that could restrict the proposed ban’s application to existing PBMs and their affiliated pharmacies. First, Section 2 applies the act to PBMs “licensed on or after the effective date,”[7] which, read literally, exempts existing licensees, including large integrated PBMs. Although the phrase could also be read to cover any PBM holding a license after enactment, the ambiguity may create uncertainty about the law’s application to existing licensees and provide grounds for legal challenges. Second, even for covered PBMs, Section 1 restricts only obtaining a permit;[8] it does not, on its face, prohibit owning or operating an existing pharmacy. As a result, a PBM that already holds a permit, or controls an entity that does, could continue operating under its existing ownership structure.
How Corporate Ownership Structures Could Limit the Bill’s Reach
The bill’s most significant potential gap, however, is that it regulates only the PBM rather than the corporate family that owns it. Vertically integrated PBMs generally hold pharmacy permits in one of two ways:
- Some hold the PBM license and the pharmacy permit in the same legal entity, so the company administering a plan’s drug benefit is, on paper, also the pharmacy dispensing the drug. S-4693 would reach that structure, but only to stop the entity from obtaining a new permit.
- Other PBMSs place the pharmacy in a separate company under common ownership.
That second structure is where the bill may have limited reach. Suppose, for example, that a holding company owns PBM LLC, which holds the PBM license, and Pharmacy LLC, which holds the pharmacy permit. S-4693 would prohibit PBM LLC from obtaining a pharmacy permit, but it does not expressly prohibit the common-ownership arrangement itself.
In other words, as drafted, the bill leaves intact certain common ownership arrangements that may create incentives for PBMs to steer prescriptions to affiliated pharmacies and restrict access to pharmacy networks in ways that favor their own pharmacy operations and bottom line. The bill itself adds no express prohibition on those practices. S-4693 also provides no divestiture requirement or transition period and no penalty for violations. Without these elements, even a clearly applicable prohibition would be difficult to implement and enforce.
Lessons From Tennessee’s FAIR Rx Act
New Jersey lawmakers may look to Tennessee’s recently enacted legislation for an example of a broader approach to regulating vertically integrated PBM ownership structures. Tennessee’s Freedom, Access, and Integrity in Registered Pharmacy (“FAIR Rx”) Act generally prohibits, beginning July 1, 2028, an entity from directly or indirectly owning or controlling a pharmacy while also owning or controlling both a health insurer and a PBM.[9]
New Jersey lawmakers could consider a similar approach and extend S-4693’s influence to PBM vertically integrated entities to effectively prohibit direct or indirect ownership and control of pharmacies. Otherwise, a PBM may be able to maintain the very conflict of interest the bill is designed to address simply by keeping its pharmacy in a separate company under the same corporate umbrella.
How Frier Levitt Can Help
Frier Levitt represents pharmacies, prescribers, hospitals, and other healthcare stakeholders in PBM-related matters, including regulatory compliance, legislative advocacy, audits, network disputes, and litigation. Our attorneys also help clients evaluate and advocate for changes to PBM legislation before it becomes law. We can assess how S-4692 and S-4693 may affect your organization, prepare proposed amendments and legislative comments, and coordinate advocacy efforts with other stakeholders. Contact Frier Levitt to discuss the potential implications of these bills and opportunities to engage in the legislative process.
[1] S. 4693, 222d Leg. (N.J. 2026), https://www.senatenj.com/DocumentCenter/View/4881/S4693.
[2] Press Release, N.J. Senate Republicans, Steinhardt, Gopal Introduce Bills to Control Prescription Drug Costs, Fight Back Against PBMs (Sept. 30, 2026), https://www.senatenj.com/m/newsflash/Home/Detail/1323.
[3] Id.; see also Doug Steinhardt & Vin Gopal, Sooner or Later, This Will Be Your Prescription, N.J. Globe (Sept. 23, 2026), https://newjerseyglobe.com/legislature/sooner-or-later-this-will-be-your-prescription/
[4] Fed. Trade Comm’n, Specialty Generic Drugs: A Growing Profit Center for Vertically Integrated Pharmacy Benefit Managers 19–20 (2025) (Second Interim Staff Report), https://www.ftc.gov/system/files/ftc_gov/pdf/PBM-6b-Second-Interim-Staff-Report.pdf; For related analysis, The FTC Releases Second Interim Report on PBMs, Frier Levitt (Feb. 12, 2025), https://www.frierlevitt.com/articles/the-ftc-releases-second-interim-report-on-pbms.
[5] S. 4692, 222d Leg. (N.J. 2026), https://www.senatenj.com/DocumentCenter/View/4880/S4692.
[6] S. 4693, § 1; see N.J. Stat. Ann. § 17B:27F-1 et seq. (West 2026) (PBM licensure); N.J. Stat. Ann. § 45:14-40 et seq. (West 2026) (Pharmacy Practice Act). See also Jonathan E. Levitt & Jesse C. Dresser, Caremark and Express Scripts Sue Arkansas, Claiming Act 624 Is Unconstitutional, Frier Levitt (June 3, 2025), https://www.frierlevitt.com/articles/caremark-and-express-scripts-sue-arkansas-claiming-act-624-is-unconstitutional. Arkansas Act 624, like S-4693, bars PBMs from acquiring or holding pharmacy permits, and the PBMs’ legal challenge previews the litigation risk New Jersey may face.
[7] S. 4693, § 2.
[8] Id. § 1.
[9] Tenn. Code Ann. § 63-10-316(b) (2026)
