New Jersey’s independent pharmacies will have new tools available to them in the coming months and years after Governor Phil Murphy signed three bills into law in July 2023. The three bills, Senate Bill 1614 (S1614), Senate Bill 1615 (S1615) and Bill A-536/2841 (A536) will be implemented incrementally over the next two years and are aimed at advancing prescription drug affordability and establishing oversight of pharmacy benefit managers (PBMs) in New Jersey.
S1615 and A536 provide significant benefits for independent pharmacies in New Jersey as the bills require PBMs to be more transparent with their financial data while limiting unfair PBM business practices that have favored PBMs and their affiliated pharmacy operations resulting in harm to independent pharmacies. Additionally, S1614 is designed to benefit New Jersey patients by placing a “flat cap” on patient’s out-of-pocket costs for certain emergency drugs like EpiPens, asthma inhalers and insulin.
The enactment of S1615 will introduce a new system to collect, analyze and report any data regarding drug pricing and drug chains, manufacturers and insurance carriers. S1615 increases drug pricing transparency across the supply chain and builds competition in the market. PBMs will be required to report their data to the Division of Consumer Affairs in the Department of Law and Public Safety (“Division”). 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, the Bill will require PBMs to obtain a license from the New Jersey Department of Banking and Insurance to conduct business in the state.
The goal of these laws is to limit PBMs’ role in creating negative downstream effects on drug pricing. S1615 and A536 set new transparency standards for PBM business practices and empowering pharmacies with additional legal tools to challenge improper PBM practices in New Jersey.
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.
