LEGISLATIVE FISCAL ESTIMATE
[Second Reprint]
ASSEMBLY, No. 2840
STATE OF NEW JERSEY
220th LEGISLATURE
DATED: JUNE 29, 2023
SUMMARY
Synopsis: Establishes certain data reporting requirements for prescription drug
supply chain; establishes Drug Affordability Council; appropriates
$1,500,000.
Type of Impact: Increase in State Expenditures in FY 2024; Annual Increases in State
Expenditures and Revenues Thereafter.
Agencies Affected: Department of Law and Public Safety.
Office of Legislative Services Estimate
Fiscal Impact FY 2024 FY 2025 and Thereafter
State Cost Increase Up to $1,500,000 Indeterminate
State Revenue Increase None. Indeterminate
 The Office of Legislative Services (OLS) finds that the bill will increase State expenditures by
up to $1.5 million in FY 2024 for the implementation costs of the Division of Consumer Affairs
related to the new data reporting requirements established in the bill for drug manufacturers,
insurance carriers, pharmacy benefits managers, drug wholesalers, and pharmacy services
administrative organizations, and the creation of the Drug Affordability Council. Thereafter,
the State will incur indeterminate annual operating costs for the division and the council related
to their new responsibilities under the bill.
 Each reporting entity enumerated above is to be charged an annual assessment fee by the
division sufficient to support the operational costs of the division stemming from this bill,
including costs of the Drug Affordability Council. The division is to remit any surplus
assessment fees collected during a calendar year to the reporting entities. The OLS, at this
point, cannot determine the annual operating costs of the division and the council stemming
from their duties under the bill or ascertain the revenues the State will receive from the annual
assessment fee.
Office of Legislative Services Legislative Budget and Finance Office
State House Annex Phone (609) 847-3105
P.O. Box 068 Fax (609) 777-2442
Trenton, New Jersey 08625 www.njleg.state.nj.us
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 The State also may collect an indeterminate amount of annual revenue from civil penalties
from reporting entities that do not comply with the bill’s provisions, but a significant level of
willful non-compliance is not anticipated.
BILL DESCRIPTION
This bill establishes data reporting requirements for pharmacy benefits manager, wholesale
drug distributors, insurance issuers, manufacturers, and pharmacy services administrative
organizations so that the Division of Consumer Affairs can issue an annual report on emerging
trends in prescription drug pricing at each stage of the supply chain. Every year, each reporting
entity must register with the department and report on measures such as the volume, sales, revenue,
and year-over-year change in prescription drug transactions. Once the department compiles this
information and publishes its annual report on prescription drug pricing trends, it must hold a
public hearing on the findings.
The bill also mandates that a manufacturer notify the department if it is increasing the price of
a prescription drug or if it is introducing a new drug with a wholesale acquisition cost that exceeds
the Medicare Part D specialty threshold or a biosimilar drug that has a wholesale acquisition cost
that is not at least 15 percent less than the wholesale acquisition cost of the referenced brand
biologic at the time the biosimilar drug is launched. The price increase reporting requirement
applies when a manufacturer increases the wholesale acquisition cost of brand name or generic
drugs by certain specified amounts.
Additionally, the bill establishes a Drug Affordability Council in, but not of, the Department
of Law and Public Safety. The purpose of this five public-member council is to formulate
legislative and regulatory policy recommendations that will protect New Jersey residents, State
and local governments, health benefits plans, healthcare providers, licensed pharmacies, and other
stakeholders within the State health care system from the high costs of prescription drug products.
The bill requires the council to review the reports issued and data collected by the division pursuant
to the bill and to submit annual recommendations for legislative, regulatory, or other action to the
Governor and the Legislature that seek to advance the goal of more affordable and accessible
prescription drugs for New Jersey residents.
The bill appropriates from the General Fund to the Division of Consumer Affairs in the
Department of Law and Public Safety $1,500,000 to implement the provisions of the bill.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS finds that the bill will increase State expenditures by up to $1.5 million in FY 2024
for the implementation costs of the Division of Consumer Affairs related to the new data reporting
requirements established in the bill for drug manufacturers, insurance carriers, pharmacy benefits
managers, drug wholesalers, and pharmacy services administrative organizations, and the creation
of the Drug Affordability Council. Thereafter, the State will incur indeterminate annual operating
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costs for the council and the Division of Consumer Affairs, as the bill requires: 1) registration of
each reporting entity with the division and the establishment of a data reporting intake procedure;
2) an analysis of the submitted data and the issuance of an annual report; 3) the hosting of public
hearings on the findings; and 4) administratively supporting the Drug Affordability Council.
Each reporting entity enumerated above is to be charged an annual assessment fee by the
division sufficient to support the operational costs of the division as they relate to this bill,
including costs of the Drug Affordability Council. The OLS assumes that the division will begin
to levy the assessment fee in FY 2025 per the bill’s provisions. The division is to remit any surplus
assessment fees collected during a calendar year to the reporting entities. The OLS, at this point,
cannot determine the annual operating costs of the division and the council stemming from their
duties under the bill or ascertain the revenues the State will receive from the annual assessment
fee.
The State also may collect an indeterminate amount of annual revenue from civil penalties
collected from violators of the bill’s provisions. However, a significant level of willful non-
compliance is not anticipated. Civil penalties may be imposed in the amount of $10,000 for the
first day that the reporting entity is found to have violated and for subsequent days of non-
compliance, an amount starting at $11,000 and increasing by $1,000 for each additional day of
non-compliance, not to exceed $100,000 per day.
In addition, unauthorized disclosure of certain confidential information may be subject to a
civil penalty not to exceed $2,500.
Section: Law and Public Safety
Analyst: Kristin Brunner Santos
Lead 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.).