Sponsored by:
Senator JOHN F. MCKEON
District 27 (Essex and Passaic)
SYNOPSIS
Patient and Provider Protection Act.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning pharmacy benefits managers, amending P.L.2023, c.107, and supplementing P.L.2015, c.179 (C.17B:27F-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 7 of P.L.2023, c.107 (C.17B:27F-3.3) is amended to read as follows:
7. a. A carrier, or a pharmacy benefits manager under contract with a carrier, shall establish a pharmacy and therapeutics committee responsible for managing the formulary system.
b. A carrier, or a pharmacy benefits manager under contract with a carrier, shall not allow a person with a conflict of interest to be a member of its pharmacy and therapeutics committee.
A carrier, or a pharmacy benefits manager under contract with a carrier, shall require that its pharmacy and therapeutics committee meet the requirements for conflict of interest as set by the Centers for Medicare and Medicaid Services or meets the accreditation standards of the National Committee for Quality Assurance or another independent accrediting organization.
c. A pharmacy and therapeutics committee shall ensure that no decision concerning the inclusion of a prescription drug in a formulary system, or in a particular tier of the formulary system, places a prescription drug with a higher cost in a more favorable position than a generic or biosimilar prescription drug with a lower cost.
(cf: P.L.2023, c.107, s.7)
2. Section 9 of P.L.2023, c.107 (C.17B:27F-3.4) is amended to read as follows:
9. a. If a carrier uses a pharmacy benefits manager to administer or manage the prescription drug benefits of covered persons, any pharmacy benefits manager compensation, for purposes of calculating a carrier's anticipated loss ratio or any loss ratio calculated as part of any applicable medical loss ratio filing or rate filing, shall:
(1) constitute an administrative cost incurred by the carrier in connection with a health benefits plan; and
(2) not constitute a benefit provided under a health benefits plan. A carrier shall claim only the amounts paid by the pharmacy benefits manager to a pharmacy or pharmacist as an incurred claim.
b. Any rate filing submitted by a carrier with respect to a health benefits plan that provides coverage for prescription drugs or pharmacy services and that is administered or managed by a pharmacy benefits manager shall include:
(1) a memorandum prepared by a qualified actuary describing the calculation of the pharmacy benefits manager compensation; and
(2) any records and supporting information as the department reasonably determines is necessary to confirm the calculation of the pharmacy benefits manager compensation.
c. Upon request, a carrier shall provide any records to the department that relate to the calculation of the pharmacy benefits manager and pharmacy services administrative organization compensation.
d. A pharmacy benefits manager and pharmacy services administrative organization shall provide any necessary documentation requested by a carrier that relates to pharmacy benefits manager compensation in order to comply with the requirements of this section.
e. Compensation to a pharmacy benefits manager shall be in a flat fee arrangement. No pharmacy benefits manager shall receive compensation in any form of commission structure.
(cf: P.L.2023, c.107, s.9)
3. (New section) a. A pharmacy benefits manager shall have a fiduciary duty to the long term health outcomes of covered persons.
b. A pharmacy benefits manager shall not engage 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.
4. (New section) An agreement between a pharmacy benefits manager and a manufacturer shall not be valid if the contract conditions any rebate on the exclusion of generic drugs from coverage.
5. (New section) a. A contract between a pharmacy benefits manager and a contracted pharmacy or network pharmacy shall, in the event of a dispute, be presumed to be a contract of adhesion.
b. A pharmacy benefits manager shall, for a prescription drug, reimburse:
(1) a contracted pharmacy or a network pharmacy at a rate that is at least equal to the pharmacys cost of acquiring the prescription drug; and
(2) an independent pharmacy at a rate that is up to five percent lower than the lowest reimbursement rate provided to a contracted pharmacy or a network pharmacy, but shall not reimburse an independent pharmacy at a rate that is less than the pharmacys cost of acquiring the prescription drug.
c. A pharmacy benefits manager shall not prohibit an independent pharmacy from offering a prescription drug to a covered person in the same quantity and at the same price as a contracted pharmacy or a network pharmacy.
d. As used in this section, independent pharmacy means a pharmacy that is not a contracted pharmacy or a network pharmacy.
6. This act shall take effect on the first day of the seventh month next following the date of enactment and shall apply to contracts and agreements entered into, renewed, modified, or amended on or after the effective date, but the Commissioner of Banking and Insurance may take such anticipatory administrative action in advance thereof as shall be necessary for the implementation of the act.
STATEMENT
This bill, 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 the long term health outcomes of covered persons. 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.
As it relates to pharmacy benefits managers and pharmacies, the bill stipulates that a contract between a pharmacy benefits manager and a contracted pharmacy or network pharmacy is, in the event of a dispute, to be presumed to be a contract of adhesion. A contract of adhesion 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:
(1) a contracted pharmacy or a network pharmacy at a rate that is at least equal to the pharmacys cost of acquiring the prescription drug; and
(2) an independent pharmacy at a rate that is up to five percent lower than the lowest reimbursement rate provided to a contracted pharmacy or a network pharmacy, but not less than the pharmacys cost of acquiring the prescription drug.