Establishes three-year Medicaid demonstration project to pay for certain drugs according to value-based system.

A4599

ASSEMBLY, No. 4599

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED MARCH 10, 2026

Sponsored by:

Assemblywoman� CAROL A. MURPHY

District 7 (Burlington)

SYNOPSIS

���� Establishes three-year Medicaid demonstration project
to pay for certain drugs according to value-based system.�

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act

concerning value-based payment for prescription
drugs in Medicaid program.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

�����
1.�� a.�
The Department of Human Services, subject to federal approval and the
availability of federal financial participation under Title XIX of the Social
Security Act (42 U.S.C.s.1396 et seq.), shall establish a three-year
demonstration project to employ
value-based

payment systems for a limited number of prescription drugs covered under the
program.� Under the demonstration project, the department shall enter into
purchasing or rebate agreements with the manufacturers of at least three
different prescription drugs, which will provide that the total reimbursement
paid by the State for such drugs will be based in some part on observed
outcomes of the drug�s use in patients.

���� b.��� The drugs selected for
the demonstration program shall:

���� (1)�� have specific
therapeutic purposes with outcomes that are readily measurable with existing
data systems; and

���� (2)�� be among the
highest-cost drugs in the New Jersey Medicaid program in aggregate spending.

���� c.���� Under the demonstration
program, the department and the manufacturer of each drug selected for the
program shall agree to
(1) the best terms to
accommodate the chosen value-based purchasing or rebate agreement, based on
other value-based agreements with manufacturers that take into consideration
observed outcomes of the drug�s use in patients;
and
(2)
other relevant factors in the design of
the demonstration program.

���� d.��� The department shall
require that Medicaid managed care organizations participate in the
demonstration program, and shall specify the obligations of the managed care
organizations under the demonstration program in the contract between the
department and the managed care organizations.� �

�����
2.�� After
the expiration of the three-year demonstration project
established pursuant to section 1 of this act
, the Commissioner of
Human Services shall report to the Governor, and
to
the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), on the
results of the demonstration project, along with the commissioner�s
recommendations
on the advisability of
re-establishing
the
demonstration
project
, including whether a new demonstration
project should expand upon the scope of the demonstration project established
pursuant to section 1 of this act and any other recommended modifications as
the commissioner deems appropriate
.� The
report shall include specific performance test results,
which shall be

aggregated and de-identified as necessary to protect patients� identities and
health information protected by State and federal law.

���� 3.��� The
Commissioner of Human
Services shall apply for such State plan amendments or waivers as may be
necessary to implement the provisions of this act and to secure federal
financial participation for State Medicaid expenditures under the federal
Medicaid program.

���� 4.��� This act shall take
effect on the first day of the seventh month next following the date of
enactment and shall expire three years after the date that the Department of
Human Services commences implementation of the demonstration project, but the Commissioner
of Human Services may take such anticipatory administrative action in advance
thereof as shall be necessary for the implementation of this act.

STATEMENT

����
This bill establishes a three-year Medicaid demonstration
project to pay for certain drugs according to a value-based payment system.

����� Under the bill, the Department of Human Services will
establish a three-year demonstration project to employ value-based payment
systems for a limited number of prescription drugs covered under the program.�
The department will enter into purchasing or rebate agreements with the
manufacturers of at least three different prescription drugs, which will
provide that the total reimbursement paid by the State for such drugs will be
based in some part on observed outcomes of the drug�s use in patients.

����� The drugs selected for the demonstration project will
have specific therapeutic purposes with outcomes that are readily measurable
with existing data systems, and will be among the highest-cost drugs in the New
Jersey Medicaid program in aggregate spending.� The department and the
manufacturer of each drug selected for the project must agree to the best terms
to accommodate the chosen value-based purchasing or rebate agreement based on
other value-based agreements with manufacturers that take into consideration
observed outcomes of the drug�s use in patients.�

����� The department will require that Medicaid managed
care organizations participate in the demonstration project, and will specify
the obligations of the managed care organizations under the demonstration
program in the contract between the department and the managed care
organizations.�

���� After the expiration of the three-year demonstration
project, the Commissioner of Human Services will report to the Governor and
Legislature on the results of the demonstration project, along with the
commissioner�s recommendations on the advisability of re-establishing,
expanding, or otherwise modifying the project.� The report shall include
specific performance test results, which have been aggregated and de-identified
as necessary to protect patients� identities and health information protected
by State and federal law.