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A5020
ASSEMBLY, No. 5020
STATE OF NEW JERSEY
222nd LEGISLATURE
�
INTRODUCED MAY 7, 2026
Sponsored by:
Assemblywoman� LUANNE M. PETERPAUL
District 11 (Monmouth)
Co-Sponsored by:
Assemblyman Kearney
SYNOPSIS
���� Prohibits pharmacy benefit manager from using spread
pricing as model of prescription drug pricing; requires transparency in
provision of pharmacy benefits management services.
CURRENT VERSION OF TEXT
���� As introduced.
��
An Act
concerning pharmacy benefit managers and amending
P.L.2023, c.107.
����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:
���� 1.��� Section 3 of P.L.2023,
c.107 (C.17B:27F-3.1) is amended to read as follows:
���� 3. a. A carrier shall:
���� (1) monitor all activities
carried out on behalf of the carrier by a pharmacy benefits manager if the
carrier contracts with a pharmacy benefits manager and is related to a
carrier's prescription drug benefits; and
���� (2) ensure that all
requirements of this section are met.
���� b.��� A carrier that contracts
with a pharmacy benefits manager to perform any activities related to the
carrier's prescription drug benefits shall ensure that, under the contract, the
pharmacy benefits manager acts as the carrier's agent in good faith and fair
dealing in the performance of all of its contractual duties.� All funds
received by the pharmacy benefits manager in relation to providing pharmacy
benefits management services shall be used or distributed only pursuant to the
pharmacy benefits manager's contract with the health benefits plan or carrier
or applicable law; including any administrative fee or payment to the pharmacy
benefits manager expressly provided for in the contract to compensate the
pharmacy benefits manager for its services.� Any funds received by the pharmacy
benefits manager through spread pricing shall be subject to this subsection.
���� c. (1) A pharmacy benefits
manager interacting with a covered person shall have the same duty to a covered
person as the health benefits plan or carrier for whom it is performing
pharmacy benefits management services.
���� (2) A pharmacy benefits
manager shall have a duty of good faith and fair dealing with all parties,
including but not limited to covered persons and pharmacies, with whom it
interacts in the performance of pharmacy benefits management services.
���� d.��� A carrier or pharmacy
benefits manager shall not require a covered person to make a payment at the
point of sale for a covered prescription drug in an amount greater than the
lesser of:
���� (1) the applicable
cost-sharing amount for the prescription drug; or
���� (2) the amount a covered
person would pay for the prescription medication if the covered person
purchased the prescription medication without using a health benefits plan.
���� e.���� A carrier shall provide
a reasonably adequate retail pharmacy network for the provision of prescription
drugs for its covered persons.
���� f.����
(1) Notwithstanding
any provision to the contrary, a pharmacy benefits manager shall not utilize
spread pricing in the provision of pharmacy benefits management services or enter
into any contract or arrangement, or extension or renewal of a contract or
arrangement, for pharmacy benefit management services with a carrier,
purchaser, or pharmacy, unless the contract or arrangement specifies that the
pharmacy benefits manager remits 100 percent of rebates, fees, alternative
discounts, and other remuneration received from any applicable entity that are
related to the utilization of drugs or drug spending under the health benefits
plan to the carrier, health benefits plan, or the purchaser.
����
(2)�� Nothing in this
subsection shall prevent a pharmacy benefits manager from charging a pharmacy
benefit management fee or from entering into a contract for a passthrough
pricing model for compensation for services provided.
����
(3)�� In a manner and form
as prescribed by the commissioner, a pharmacy benefit manager shall submit to
the department financial statements prepared as of the close of its fiscal year
within 120 days after the close of the fiscal year. �These financial statements
shall be accompanied by a report, certificate, or opinion of an independent
certified public accountant or independent public accountant. �An audit shall
be conducted in accordance with generally accepted auditing standards and the
rules and regulations of the department.� Within 45 days after the close of each
quarter of its fiscal year, a pharmacy benefit manager shall submit its
quarterly unaudited financial statement, prepared in accordance with generally
accepted accounting principles and consisting of at least a balance sheet,
statement of income, statement of cash flows, statement of changes in equity,
and notes to financial statements as of the date and for the period specified
by the commissioner. �The commissioner may require the submission of these
reports on a monthly or other periodic basis.� A pharmacy benefit manager shall
make special reports to the commissioner as the commissioner may require.�
Financial statements and any other records produced, disclosed, or otherwise
made available to the department under this subsection shall be received and
maintained on a confidential basis and protected from public disclosure.
����
g.��� On an annual basis
starting one year following the date of enactment, the department shall submit
a report to the Governor and the Legislature pursuant to section 2 of P.L.1991,
c.164 (C.52:14-19.1), with all personal identifying information removed, on the
compensation and pricing, and financial statements of pharmacy benefit
managers, and how, if at all, that compensation and pricing impacts the cost of
health benefits plans to covered persons.� The report shall be made available
to the public on the department�s website.
����
h.
��� For the purposes
of this section
[
,
]
:
����
�Commissioner� means the
Commissioner of Banking and Insurance.
���� "
[
health
]
Health
benefits plan" shall include the State Health Benefits Plan, the School
Employees' Health Benefits Plan, the State Medicaid program established
pursuant to P.L.1968, c.413 (C.30:4D-1 et seq.), or a self-insured health
benefits plan governed by the provisions of the federal "Employee
Retirement Income Security Act of 1974," 29 U.S.C., ss.1001 et seq.
����
�Passthrough pricing model�
means a payment model used by a pharmacy benefit manager in which the payments
made by the carrier or purchaser to the pharmacy benefit manager for the
covered outpatient drugs are both of the following:
����
(1) Equivalent to the
payments the pharmacy benefit manager makes to a pharmacy or provider for those
drugs, including any contracted professional dispensing fee between the
pharmacy benefit manager and its network of pharmacies, which the equivalent dispensing
fee would be paid if the carrier or purchaser was making the payments directly.
����
(2) Passed through in their
entirety by the carrier or purchaser or by the pharmacy benefit manager to the
pharmacy or provider that dispenses the drugs, and the payments are made in a
manner that is not offset by any reconciliation.
����
�Pharmacy benefit
management fee� means a flat, defined, dollar-amount fee that covers the cost
of providing one or more pharmacy benefit management services and that does not
exceed the bona fide value of the itemized service or services actually performed
by the pharmacy benefit manager on behalf of the health benefits plan, that the
health benefits plan would otherwise perform or contract for in the absence of
the service arrangement, whether or not the health benefits plan takes title to
the prescription drug. The value of the service or services shall be based on
the value to the health benefits plan. A pharmacy benefit management fee may
not directly or indirectly be based on or contingent upon any of the following:
����
(1) The price of
prescription drugs, including direct or indirect rebates, discounts, wholesale
acquisition cost, drug benchmark price, such as average wholesale price, or
other price concessions.
����
(2) The amount of savings,
rebates, or other fees charged, realized, or collected by, or generated based
on the activity of, the pharmacy benefit manager or its affiliated entities,
that is retained by the pharmacy benefit manager or its affiliated entities.
����
(3) The amount of premiums,
deductibles, or other cost sharing or fees charged, realized, or collected by
the pharmacy benefit manager or its affiliated entities from patients or other
persons on behalf of a patient.
����
(4) Coverage or formulary
placement decisions or the volume or value of any referrals or business
generated between the parties to the arrangement.
����
(5) Any other amounts or
methodologies as defined by the department.
����
�Spread pricing� means the
model of prescription drug pricing in which a pharmacy benefits manager charges
a carrier or purchaser a contracted price for a prescription drugs, and the
contracted price for the prescription drugs differs from the amount the
pharmacy benefit manager directly or indirectly pays the pharmacy.
(cf: P.L.2023, c.107, s.3)
���� 2. This act shall take effect
immediately and shall apply to contracts or arrangements, or extensions or
renewals of contracts or arrangements, entered into on or after that date.
STATEMENT
���� This bill prohibits pharmacy
benefit managers from using spread pricing as a form of compensation in
contracts for pharmacy benefits management services with carriers, health
benefits plans, and pharmacies.� Spread pricing is when a pharmacy benefits
manager charges a health benefits plan or carrier a contracted price for a
prescription drugs, and the contracted price for the prescription drugs differs
from the amount the pharmacy benefit manager directly or indirectly pays the
pharmacy.� The bill bans the use of spread pricing by a pharmacy benefit
manager, and it restricts a pharmacy benefit manager from entering into a
contract to provide pharmacy benefits management services unless the contract
provides that the pharmacy benefits manager remits 100 percent of rebates,
fees, alternative discounts, and other remuneration received from any
applicable entity that are related to the utilization of drugs or drug spending
under the health benefits plan to the carrier, health benefits plan, or the
purchaser.�
���� Additionally, the bill
provides that a pharmacy benefit manager is required to submit to the Department
of Banking and Insurance financial statements prepared as of the close of its
fiscal year within 120 days after the close of the fiscal year, and that the
department will conduct an audit of those statements. Further, the bill
provides that the commissioner may require the submission of these reports on a
monthly or other periodic basis.
���� Finally, on an annual basis
starting one year following the date of enactment, the bill requires the department
to submit a report to the Governor and the Legislature pursuant to section 2 of
P.L.1991, c.164 (C.52:14-19.1), with all personal identifying information
removed, on the compensation and pricing, and financial statements of pharmacy
benefit managers, and how, if at all, that compensation and pricing impacts the
cost of health benefits plans to covered persons.� The bill requires the report
to be available to the public on the department�s website.