LEGISLATIVE FISCAL ESTIMATE
[Third Reprint]
ASSEMBLY COMMITTEE SUBSTITUTE FOR
ASSEMBLY, Nos. 536 and 2841
STATE OF NEW JERSEY
220th LEGISLATURE
DATED: JULY 5, 2023
SUMMARY
Synopsis: Establishes new transparency standards for pharmacy benefits
manager business practices.
Type of Impact: State revenue increase from pharmacy services administrative
organization registration fees.
Agencies Affected: Department of Banking and Insurance.
Office of Legislative Services Estimate
Fiscal Impact
State Cost Increase Indeterminate
State Revenue Increase Modest increase, likely around $20,000
 The Office of Legislative Services (OLS) estimates that this bill will result in a modest increase
in State revenue collections of approximately $20,000 every three years. The bill requires that
pharmacy benefits managers apply for a license and pharmacy services administration
organizations register with the Department of Banking and Insurance every three years. Given
that the revised pharmacy benefits manager license term and construct does not contain any
material changes from the existing process, the entire net increase in revenue will derive from
the newly-required pharmacy services administrative organization registrations. There are
currently eight pharmacy services administrative organizations operating in New Jersey.
 The OLS notes that the bill may result in an annual increase in State revenue collections from
penalties pharmacy benefits managers are subject to for violations of the provisions of the bill.
 The OLS also notes that the enactment of the bill may result in an indeterminate State
administrative cost increase from the bill’s requirement that the department establish, by
regulation, certain minimum standards for the issuance of a license to a pharmacy benefits
manager.
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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BILL DESCRIPTION
This bill sets new transparency standards for pharmacy benefits manager business practices.
Specifically, the bill concerns the licensing and reporting requirements of carriers, pharmacy
benefits managers, and pharmacy services administrative organizations. The bill requires that
pharmacy benefits managers apply for a license and pharmacy services administrative
organizations register with the Department of Banking and Insurance every three years and
requires carriers to ensure that a pharmacy benefits manager under contract with the carrier acts in
good faith and fair dealing in the performance of all its contractual duties. The bill requires the
Department of Banking and Insurance to establish, by regulation, certain minimum standards for
the issuance of licenses to pharmacy benefits managers.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS concludes that this bill will result in a positive impact, likely insignificant, on State
revenue through increased license and registration fees. The bill requires that pharmacy benefits
managers apply for a license and pharmacy services administration organizations register with the
Department of Banking and Insurance every three years. Under current state regulations,
pharmacy benefits managers register under the process used for an “Organized Delivery System”
with a three-year fee of $2,500. The bill provides that any firms which have registered under the
organized delivery system process would have 24 months to apply under the new pharmacy
benefits manager license process. Given the high concentration of firms in this market (there are
only 15 firms nationally that have any measurable market share) and the length of the grace period,
there will be no material effect from license revenues from this change for pharmacy benefits
managers.
The OLS assumes that a similar license fee of $2,500 will be charged for the pharmacy services
administrative organization registration. Currently, there are eight pharmacy services
administration organizations active in New Jersey. Considering that it is unlikely that any of these
firms would be operating under an organized delivery system license or certification, the OLS
estimate assumes that all eight firms will register to comply with the requirements in the year
following enactment.
The bill increases the penalties pharmacy benefits managers are subject to for violations of the
provisions of the bill. The OLS notes that this provision may increase revenue collections by an
indeterminate, likely insignificant, amount.
The OLS also notes that the enactment of the bill may result in an indeterminate State
administrative cost increase from the bill’s requirement that the department establish, by
regulation, certain minimum standards for the issuance of a license to a pharmacy benefits
manager.
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Section: Commerce, Labor and Industry
Analyst: John Gaudioso
Assistant 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.).


Statutes affected:
Advance Law: 17B:27F-1, 17B:27F-2, 17B:27F-3, 17B:27F-6, 17B:27F-10
Pamphlet Law: 17B:27F-1, 17B:27F-2, 17B:27F-3, 17B:27F-6, 17B:27F-9, 17B:27F-10