New Jersey Governor Mikie Sherrill has identified pharmacy benefit manager (PBM) reform as a central priority for her administration. During her inaugural budget address before a joint session of the New Jersey Legislature on March 10, 2026, Governor Sherrill called for the passage of what she described as a “comprehensive and historic” reform to PBM practices in the Garden State. Her remarks come amid a broader nationwide wave of PBM regulation at both the federal and state levels, with potential implications for insurers, employers, pharmacies, and patients across New Jersey.
PBMs serve as intermediaries that manage prescription drug benefits on behalf of insurers, employers, and Medicare Part D plan sponsors. Their responsibilities typically include negotiating rebates with drug manufacturers, establishing pharmacy networks, and administering reimbursement arrangements between payors and pharmacies.
In her budget address, Governor Sherrill criticized PBMs as opaque middlemen within the pharmaceutical supply chain, stating that PBM practices can increase prescription drug costs through rebate structures and other pricing mechanisms. According to the Governor, reforms targeting PBM practices could reduce healthcare costs and improve transparency within the prescription drug marketplace.
Governor Sherrill also suggested that limiting PBM pricing practices could generate savings for New Jersey’s Medicaid program. During the address, she indicated that New Jersey could potentially save approximately $20 million if PBMs were no longer permitted to inflate the prices paid for prescription medications.
Legislative Momentum for PBM Reform
Several New Jersey legislators have already indicated support for advancing PBM reform measures.
State Senator Vin Gopal (D–Long Branch) praised the Governor’s announcement and indicated that lawmakers intend to pursue legislation aimed at restructuring how PBMs operate within the state. According to Senator Gopal, potential reforms may focus on increasing transparency, strengthening regulatory oversight, and addressing practices that lawmakers believe contribute to higher prescription drug costs and competitive disadvantages for community pharmacies.
Similarly, Assemblyman Roy Freiman (D–Hillsborough), Chair of the Assembly Financial Institutions and Insurance Committee, has continued to advocate for the Patient and Provider Protection Act, a bill intended to increase oversight and transparency in PBM operations. The legislation was previously reported out of committee during the prior legislative session but did not advance further.
Assemblyman Freiman noted that Governor Sherrill’s remarks may help build momentum for the legislation in the current session.
Potential Implications for the Healthcare Industry
Governor Sherrill’s comments reflect a broader national trend in which state and federal policymakers are increasingly examining PBM practices, including rebate structures, pharmacy reimbursement methodologies, and the impact of vertically integrated healthcare entities.
If New Jersey ultimately advances comprehensive PBM legislation, it could have significant implications for pharmacies, payors, PBMs, and other stakeholders operating within the state’s prescription drug marketplace.
How Frier Levitt Can Help
Frier Levitt is actively monitoring legislative and regulatory developments affecting PBMs and the broader pharmaceutical supply chain in New Jersey and across the country. As PBM regulation continues to evolve, pharmacies, healthcare providers, and industry participants should carefully evaluate how potential reforms may impact reimbursement structures, network participation, and compliance obligations.
If you have questions regarding PBM regulation, pharmacy reimbursement, or healthcare regulatory compliance, the attorneys at Frier Levitt are available to assist.
