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A1502 ACS [1R] FISCAL ESTIMATE
LEGISLATIVE FISCAL ESTIMATE
[First Reprint]
ASSEMBLY COMMITTEE SUBSTITUTE FOR
ASSEMBLY, No. 1502
STATE OF NEW JERSEY
222nd LEGISLATURE
DATED: MAY 20, 2026
SUMMARY
Synopsis:
"Patient and Provider Protection Act."
Type of Impact:
Annual State and local government cost impact.
Agencies Affected:
Division of Pension and Benefits in the Department of the
Treasury, Department of Human Services, local governments, school districts.
Fiscal Impact
Annual State Cost Impact
Indeterminate
Annual Local Cost Impact
Indeterminate
�
The Office of Legislative Services (OLS) finds that the bill
would have an indeterminate impact on State expenditures related to employee
health insurance and for expenditures related to NJ Family care, the State�s
Medicaid program. The bill would also have an indeterminate impact on local
government expenditures, including school districts, related to the purchase of
employee health insurance.
�
The bill imposes new requirements on pharmacy benefits managers
that would impact the cost of providing prescription drug coverage through
health plans covered by the provisions of the bill.
�
Some of the bill�s provisions would potentially increase the cost
of these health plans while others would potentially lower costs. The OLS lacks
the informational basis to quantify the magnitude of these impacts.
�
The State Health Benefits Program, the School Employees' Health
Benefits Program, and NJ FamilyCare, the State�s Medicaid program, are all
covered by the provisions of the bill.
BILL DESCRIPTION
����� The Patient and
Provider Protection Act establishes certain requirements for pharmacy benefits
managers relating to contractual agreements with manufacturers and pharmacies.
Under the bill, pharmacy benefits managers have a fiduciary duty to act in the
best interests of the carrier with which it contracts. This includes contracts
between pharmacy benefits managers and the State Health Benefits Program,
School Employees� Health Benefits Program, and NJ Family Care, the State�s Medicaid
program.
����� In addition, pharmacy
benefits managers are prohibited from engaging in any marketing activity that
uses inaccurate or misleading information to convince or attempt to convince
covered persons to use a contracted or network pharmacy. Furthermore, the bill
stipulates that an agreement between a pharmacy benefits manager and a
manufacturer is not valid if the contract conditions any rebate on the
exclusion of generic drugs from coverage.
����� In the event of a
dispute, the bill stipulates that a contract between a pharmacy benefits
manager and a contracted pharmacy or network pharmacy is to be presumed to be a
contract of adhesion, which is a standardized contract in which one party has
significantly superior bargaining power. In a contractual dispute involving a
contract of adhesion, the courts may subject the contract to special scrutiny.
����� The bill also requires
pharmacy benefits managers, for a prescription drug, to reimburse pharmacies at
the State fee-for-service benchmark of the National Average Drug Acquisition
Cost (NADAC) plus the prevailing State defined Medicaid professional dispensing
fee.� However, if a pharmacy benefits manager, or an affiliate of the pharmacy
benefits manager, owns or controls a pharmacy, the pharmacy benefits manager
shall reimburse the pharmacy for a prescription drug at the State
fee-for-service benchmark of the NADAC and shall exclude the prevailing State
defined Medicaid professional dispensing fee.� In either circumstance, if the
NADAC is not established for a specific national drug code, the ingredient
reimbursement rate shall default to the Wholesale Average Cost or the Suggested
Wholesale Price. The bill stipulates that a pharmacy benefits manager may not
engage in differential payment pricing. A pharmacy benefits manager is required
to reimburse all contracted pharmacies at the same rate regardless of ownership
or affiliation. Additionally, a pharmacy benefits manager is prohibited from
deriving income from pharmacy benefits management services provided to a
carrier or health benefits plan in this State except for income derived from a
pharmacy benefits management fee that is agreed upon between the pharmacy
benefits manager and carrier or health benefits plan. The pharmacy benefits
management fee charged or paid to a pharmacy benefits manager from a carrier or
health benefits plan must not be directly or indirectly based or contingent
upon: (1) the acquisition cost or any other price metric of a drug; (2) the
amount of savings, rebates, or other fees charged, realized, or collected by or
generated based on the activity of the pharmacy benefits manager; or (3) the
amount of premiums, deductibles, or other cost sharing or fees charged,
realized, or collected by the pharmacy benefits manager from patients or other
persons on behalf of a patient.
����� Finally, under the
bill, a pharmacy benefits manager is prohibited from providing a
recommendation, advice, or counsel to a plan sponsor or carrier concerning the
inclusion of a prescription drug in a formulary system, or in a particular tier
of the formulary system, that places a prescription drug with a higher cost to
the patient, including but not limited to coinsurance, copayments, deductibles,
and other cost-sharing, in a more favorable position than a generic or
biosimilar prescription drug with a lower cost, if the recommendation, advice,
or counsel is based solely on the cost of the prescription drug and not on
another factor.
FISCAL ANALYSIS
EXECUTIVE BRANCH
����� None received.
OFFICE OF LEGISLATIVE SERVICES
����� The OLS finds that the bill would have an
indeterminate impact on State expenditures related to employee health insurance
and for expenditures related to NJ Family care, the State�s Medicaid program.�
The bill would also have an indeterminate impact on local government
expenditures, including school districts, related to the purchase of employee
health insurance.
����� The bill imposes new requirements on pharmacy benefits
managers that would impact the cost of providing prescription drug coverage
through health plans covered by the provisions of the bill.� Some of the bill�s
provisions would potentially increase the cost of these health plans while
others would potentially lower costs.� The OLS lacks the informational basis to
quantify the magnitude of these impacts.
����� The OLS notes that the State Health Benefits Program,
the School Employees' Health Benefits Program, and NJ FamilyCare, the State�s
Medicaid program, are covered by the bill.
Section:
Commerce, Labor and Industry
Analyst:
John Gaudioso
Associate Fiscal Analyst
Approved:
Thomas Koenig
Legislative Budget and Finance Officer
This legislative fiscal estimate has been produced by the
Office of Legislative Services due to the failure of the Executive Branch to
respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980,
c.67 (C.52:13B-6 et seq.).