Prohibits pharmacy benefit manager from using spread pricing as model of prescription drug pricing; requires transparency in provision of pharmacy benefits management services.
Summary
Assembly Bill 5020 would amend New Jersey’s pharmacy benefit manager (PBM) law to prohibit spread pricing in pharmacy benefits management contracts. Under the bill, a PBM could not charge a carrier or purchaser one price for a prescription drug while paying the pharmacy a lower amount and keeping the difference. Instead, contracts would have to require that 100 percent of rebates, fees, alternative discounts, and other drug-related remuneration be passed through to the carrier, health benefits plan, or purchaser. The bill also preserves the ability of PBMs to be paid through a flat pharmacy benefit management fee or a passthrough pricing model, so long as compensation is not tied to drug prices or other prohibited metrics.
The bill also adds transparency and reporting requirements. PBMs would have to submit annual audited financial statements and quarterly unaudited financial statements to the Department of Banking and Insurance, with the commissioner authorized to require more frequent reporting. The department would then produce an annual public report, with personal identifying information removed, describing PBM compensation, pricing, financial statements, and the extent to which those practices affect health plan costs for covered persons. The bill applies immediately to new contracts, renewals, and extensions entered into on or after enactment.
Impact
The bill would amend P.L.2023, c.107 (C.17B:27F-3.1) to impose a direct statutory ban on spread pricing by pharmacy benefit managers and to redefine permissible compensation structures for PBM services. It would also expand oversight by the Department of Banking and Insurance through mandatory financial reporting, audits, and public reporting. The law would affect PBMs, carriers, purchasers, pharmacies, and covered persons, including state-related plans such as the State Health Benefits Plan, School Employees’ Health Benefits Plan, and Medicaid, as well as self-insured ERISA plans covered by the statute.
Sentiment
Based on the bill text and the absence of recorded committee testimony or votes in the provided materials, the overall sentiment appears to be reform-oriented and consumer-protective. The bill is framed as a transparency and cost-control measure intended to limit opaque PBM compensation practices and reduce prescription drug costs for health plans and enrollees. No contrary views are documented in the supplied record, but the structure of the bill suggests support for greater oversight of PBM pricing practices.
Contention
The main policy contention is the prohibition of spread pricing and the requirement that PBMs pass through all rebates and similar remuneration. Supporters of the bill would likely view these provisions as necessary to curb hidden markups and improve accountability, while PBMs and potentially some carriers may object to restrictions on existing pricing models and the added reporting burden. Another likely point of debate is the scope of financial disclosure and state oversight, particularly the requirement for audited statements and the commissioner’s authority to demand monthly or other periodic reports. No specific objections or named opponents appear in the provided transcripts or vote history.
Same As
Prohibits pharmacy benefit manager from using spread pricing as model of prescription drug pricing; requires transparency in provision of pharmacy benefits management services.