New Jersey Pharmacies Must Proactively Take Advantage of New PBM Drug Pricing Law

This year a law in New Jersey aimed at regulating Pharmacy Benefit Managers (“PBMs”) went into effect which includes several protections for pharmacies operating in New Jersey. While New Jersey previously had laws in place to regulate PBMs, New Jersey’s new law, codified at N.J.S.A. 17B:27F-1 to F-10, recognizes the numerous challenges facing independent pharmacies in New Jersey, and aims to prevent PBMs from engaging in abusive auditing, network access, and reimbursement practices. New Jersey pharmacies must be diligent in asserting their rights under the law.

One of the most significant provisions in the law is the expansion of drug reimbursement and drug pricing appeal rights. While New Jersey’s law previously granted pharmacies appeal rights in the context MAC reimbursement, the new law expands these appeal rights to include appeal rights for drugs that are not reimbursed under MAC; i.e. all PBM drug pricing, not just MAC pricing, may now be appealed. More specifically, the law provides:

  • PBM contracts must “include a process to appeal, investigate, and resolve disputes regarding brand and multiple source generic drug pricing, including, if applicable, brand effective rate, generic effective rate, dispensing fee effective rate, and any other pricing formula for pharmacy reimbursement.” 

The law further provides that:

  • If an appeal is denied, the PBM must:
    • “provide the reason for the denial” along with “the availability, location and pricing of the appealed drug in the State”;
    • “identify the [NDC] of a drug product that is available for purchase by the specific contracted pharmacy appealing the claim in this State from wholesalers . . . at a price which is available to the specific contracted pharmacy appealing the claim and which is equal to or less than the [MAC] or the [BER], [GER] or other pricing for the appealed drug”;
    • “provide the name of wholesalers . . . from which the appealing pharmacy can obtain the brand or multiple source generic drug at or below the [BER], [GER], dispensing fee effective rate, [MAC] or any other pricing formula for pharmacy reimbursement.”

Another important provision in the law permits pharmacies that are successful in their pricing appeal to require PBMs to apply the price correction not only to the pharmacy that was successful in its appeal, but to “all similarly situated pharmacies from the date of the approved appeal.” This is an especially valuable tool for pharmacies with more than one location. Since its enactment, Frier Levitt has successfully utilized New Jersey’s law on behalf of New Jersey pharmacies. To take full advantage of this important law, pharmacies must not only be aware of their new rights thereunder, but also be proactive in invoking the law when they are facing below cost reimbursement pricing from a PBM. Frier Levitt represents independent pharmacies in New Jersey and throughout the United States in connection with challenging unlawful PBM reimbursement practices. We have developed creative fee arrangements with our pharmacy clients to ensure that it is not cost prohibitive for a pharmacy to challenge these types of abusive PBM practices, including potentially offering alternative fee arrangements (“AFA”) on a case-by-case basis.

How Frier Levitt Can Help

Frier Levitt’s attorneys have decades of expertise in fighting abusive PBM practices and can leverage these appeal rights and other laws to ensure PBMs comply with their legal obligations to operate in New Jersey. The attorneys at Frier Levitt are prepared to prosecute appeals for your pharmacy immediately and to follow-up on all appeals submitted to ensure that PBMs follow the law. Contact us today to discuss your pharmacy’s options.



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