S1423

An Act concerning pharmacy benefits managers and amending and supplementing P.L.2015, c.179.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 1 of P.L.2015, c.179 (C.17B:27F-1) is amended to read as follows:

1. As used in this act:

"Carrier" means an insurance company, health service corporation, hospital service corporation, medical service corporation, or health maintenance organization authorized to issue health benefits plans in this State.

"Contracted pharmacy" means a pharmacy that participates in the network of a pharmacy benefits manager through a contract with:

a. the pharmacy benefits manager directly;

b. a pharmacy services administration organization; or

c. a pharmacy group purchasing organization.

"Covered person" means a person on whose behalf a carrier or other entity, who is the sponsor of the health benefits plan, is obligated to pay benefits pursuant to a health benefits plan.

"Drug" means a drug or device as defined in R.S.24:1-1.

"Health benefits plan" means a benefits plan which pays hospital or medical expense benefits for covered services, or prescription drug benefits for covered services, and is delivered or issued for delivery in this State by or through a carrier or any other sponsor. For the purposes of this act, health benefits plan shall not include the following plans, policies or contracts: accident only, credit disability, long-term care, Medicare supplement coverage; TRICARE supplement coverage, coverage for Medicare services pursuant to a contract with the United States government, the State Medicaid program established pursuant to P.L.1968, c.413 (C.30:4D-1 et seq.), coverage arising out of a worker's compensation or similar law, the State Health Benefits Program, the School Employees' Health Benefits Program, 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. s.1001 et seq., coverage under a policy of private passenger automobile insurance issued pursuant to P.L.1972, c.70 (C.39:6A-1 et seq.), or hospital confinement indemnity coverage.

"Pharmacy" means any place in the State where drugs are dispensed or pharmaceutical care is provided by a licensed pharmacist, but shall not include a medical office under the control of a licensed physician.

"Pharmacy benefits manager" means a corporation, business, or other entity, or unit within a corporation, business, or other entity, that administers prescription drug benefits on behalf of a purchaser.

"Pharmacy benefits management services" means the provision of any of the following services on behalf of a purchaser: the procurement of prescription drugs at a negotiated rate for dispensation within this State; the processing of prescription drug claims; or the administration of payments related to prescription drug claims.

"Prescription" means a prescription as defined in section 5 of P.L.1977, c.240 (C.24:6E-4).

"Prescription drug benefits" means the benefits provided for prescription drugs and pharmacy services for covered services under a health benefits plan contract.

"Purchaser" means any sponsor of a health benefits plan who enters into an agreement with a pharmacy benefits management company for the provision of pharmacy benefits management services to covered persons.

“Compensation” means any direct or indirect financial benefit, including, but not limited to, rebates, discounts, credits, fees, grants, charge-backs, or other payments or benefits of any kind.

“Pharmaceutical manufacturer” or “manufacturer” means any entity that: (1) is engaged in the production, preparation, propagation, compounding, conversion, or processing of prescription drugs or biologics, by extraction from substances of natural origin or independently by means of chemical synthesis; or (2) is directly engaged in the packaging, repackaging, labeling, relabeling, or distribution of prescription drugs or biologics. “Pharmaceutical manufacturer” or “manufacturer” does not include a health care facility licensed by the Department of Health or a pharmacy holding a permit issued by the New Jersey State Board of Pharmacy.

(cf: P.L.2019, c.274, s.2)

2. (New section) a. All compensation paid by a pharmaceutical manufacturer to a pharmacy benefits manager as a result of negotiations of a reduced price for a pharmaceutical between a pharmacy benefits manager and a manufacturer, in relation to a contract between a pharmacy benefits manager and a carrier related to its prescription drug benefits, shall be remitted to and retained by the carrier and shall be used by the carrier to lower the premium for covered persons under the carrier’s health benefits plan.

b. A carrier shall annually file with the commissioner a report demonstrating how the carrier has complied with this section.

3. This act shall take effect on the first day of the seventh month next following enactment, except the commissioner may take any anticipatory administrative action in advance as shall be necessary for the implementation of this act.

STATEMENT

This bill requires carriers to pass prescription drug savings on to consumers. The bill provides that all compensation paid by a pharmaceutical manufacturer to a pharmaceutical benefits manager as a result of negotiations of a reduced price for a pharmaceutical between a pharmacy benefits manager and a manufacturer, in relation to a contract between a pharmacy benefits manager and a carrier related to its prescription drug benefits, shall be remitted to and retained by the carrier and must be used by the carrier to lower the premium for covered persons under the carrier’s health benefits plan.

In addition, the bill provides that a carrier shall annually file with the commissioner a report demonstrating how the carrier has complied with the provisions of the bill.

Under the bill, “compensation” is defined as any direct or indirect financial benefit, including, but not limited to, rebates, discounts, credits, fees, grants, charge-backs, or other payments or benefits of any kind.