Bill Text: NJ S4208 | 2026-2027 | Regular Session | Introduced
Bill Title: Prohibits pharmacy benefit manager from using spread pricing as model of prescription drug pricing; requires transparency in provision of pharmacy benefits management services.
Sponsorship: Partisan Bill (Democrat 1)
Status: (Introduced) 2026-05-11 - Introduced in the Senate, Referred to Senate Commerce Committee [S4208 Detail]
Download: New_Jersey-2026-S4208-Introduced.html
Sponsored by:
Senator RAJ MUKHERJI
District 32 (Hudson)
SYNOPSIS
Prohibits pharmacy benefit manager from using spread pricing as model of prescription drug pricing; requires transparency in provision of pharmacy benefits management services.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning pharmacy benefit managers and amending P.L.2023, c.107.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 3 of P.L.2023, c.107 (C.17B:27F-3.1) is amended to read as follows:
3. a. A carrier shall:
(1) monitor all activities carried out on behalf of the carrier by a pharmacy benefits manager if the carrier contracts with a pharmacy benefits manager and is related to a carrier's prescription drug benefits; and
(2) ensure that all requirements of this section are met.
b. A carrier that contracts with a pharmacy benefits manager to perform any activities related to the carrier's prescription drug benefits shall ensure that, under the contract, the pharmacy benefits manager acts as the carrier's agent in good faith and fair dealing in the performance of all of its contractual duties. All funds received by the pharmacy benefits manager in relation to providing pharmacy benefits management services shall be used or distributed only pursuant to the pharmacy benefits manager's contract with the health benefits plan or carrier or applicable law; including any administrative fee or payment to the pharmacy benefits manager expressly provided for in the contract to compensate the pharmacy benefits manager for its services. Any funds received by the pharmacy benefits manager through spread pricing shall be subject to this subsection.
c. (1) A pharmacy benefits manager interacting with a covered person shall have the same duty to a covered person as the health benefits plan or carrier for whom it is performing pharmacy benefits management services.
(2) A pharmacy benefits manager shall have a duty of good faith and fair dealing with all parties, including but not limited to covered persons and pharmacies, with whom it interacts in the performance of pharmacy benefits management services.
d. A carrier or pharmacy benefits manager shall not require a covered person to make a payment at the point of sale for a covered prescription drug in an amount greater than the lesser of:
(1) the applicable cost-sharing amount for the prescription drug; or
(2) the amount a covered person would pay for the prescription medication if the covered person purchased the prescription medication without using a health benefits plan.
e. A carrier shall provide a reasonably adequate retail pharmacy network for the provision of prescription drugs for its covered persons.
f. (1) Notwithstanding any provision to the contrary, a pharmacy benefits manager shall not utilize spread pricing in the provision of pharmacy benefits management services or enter into any contract or arrangement, or extension or renewal of a contract or arrangement, for pharmacy benefit management services with a carrier, purchaser, or pharmacy, unless the contract or arrangement specifies that the pharmacy benefits manager remits 100 percent of rebates, fees, alternative discounts, and other remuneration received from any applicable entity that are related to the utilization of drugs or drug spending under the health benefits plan to the carrier, health benefits plan, or the purchaser.
(2) Nothing in this subsection shall prevent a pharmacy benefits manager from charging a pharmacy benefit management fee or from entering into a contract for a passthrough pricing model for compensation for services provided.
(3) In a manner and form as prescribed by the commissioner, a pharmacy benefit manager shall submit to the department financial statements prepared as of the close of its fiscal year within 120 days after the close of the fiscal year. These financial statements shall be accompanied by a report, certificate, or opinion of an independent certified public accountant or independent public accountant. An audit shall be conducted in accordance with generally accepted auditing standards and the rules and regulations of the department. Within 45 days after the close of each quarter of its fiscal year, a pharmacy benefit manager shall submit its quarterly unaudited financial statement, prepared in accordance with generally accepted accounting principles and consisting of at least a balance sheet, statement of income, statement of cash flows, statement of changes in equity, and notes to financial statements as of the date and for the period specified by the commissioner. The commissioner may require the submission of these reports on a monthly or other periodic basis. A pharmacy benefit manager shall make special reports to the commissioner as the commissioner may require. Financial statements and any other records produced, disclosed, or otherwise made available to the department under this subsection shall be received and maintained on a confidential basis and protected from public disclosure.
g. On an annual basis starting one year following the date of enactment, the department shall submit a report to the Governor and the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), with all personal identifying information removed, on the compensation and pricing, and financial statements of pharmacy benefit managers, and how, if at all, that compensation and pricing impacts the cost of health benefits plans to covered persons. The report shall be made available to the public on the department's website.
h. For the purposes of this section[,]:
"Commissioner" means the Commissioner of Banking and Insurance.
"[health] Health benefits plan" shall include the State Health Benefits Plan, the School Employees' Health Benefits Plan, the State Medicaid program established pursuant to P.L.1968, c.413 (C.30:4D-1 et seq.), 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., ss.1001 et seq.
"Passthrough pricing model" means a payment model used by a pharmacy benefit manager in which the payments made by the carrier or purchaser to the pharmacy benefit manager for the covered outpatient drugs are both of the following:
(1) Equivalent to the payments the pharmacy benefit manager makes to a pharmacy or provider for those drugs, including any contracted professional dispensing fee between the pharmacy benefit manager and its network of pharmacies, which the equivalent dispensing fee would be paid if the carrier or purchaser was making the payments directly.
(2) Passed through in their entirety by the carrier or purchaser or by the pharmacy benefit manager to the pharmacy or provider that dispenses the drugs, and the payments are made in a manner that is not offset by any reconciliation.
"Pharmacy benefit management fee" means a flat, defined, dollar-amount fee that covers the cost of providing one or more pharmacy benefit management services and that does not exceed the bona fide value of the itemized service or services actually performed by the pharmacy benefit manager on behalf of the health benefits plan, that the health benefits plan would otherwise perform or contract for in the absence of the service arrangement, whether or not the health benefits plan takes title to the prescription drug. The value of the service or services shall be based on the value to the health benefits plan. A pharmacy benefit management fee may not directly or indirectly be based on or contingent upon any of the following:
(1) The price of prescription drugs, including direct or indirect rebates, discounts, wholesale acquisition cost, drug benchmark price, such as average wholesale price, or other price concessions.
(2) The amount of savings, rebates, or other fees charged, realized, or collected by, or generated based on the activity of, the pharmacy benefit manager or its affiliated entities, that is retained by the pharmacy benefit manager or its affiliated entities.
(3) The amount of premiums, deductibles, or other cost sharing or fees charged, realized, or collected by the pharmacy benefit manager or its affiliated entities from patients or other persons on behalf of a patient.
(4) Coverage or formulary placement decisions or the volume or value of any referrals or business generated between the parties to the arrangement.
(5) Any other amounts or methodologies as defined by the department.
"Spread pricing" means the model of prescription drug pricing in which a pharmacy benefits manager charges a carrier or purchaser a contracted price for a prescription drugs, and the contracted price for the prescription drugs differs from the amount the pharmacy benefit manager directly or indirectly pays the pharmacy.
(cf: P.L.2023, c.107, s.3)
2. This act shall take effect immediately and shall apply to contracts or arrangements, or extensions or renewals of contracts or arrangements, entered into on or after that date.
STATEMENT
This bill prohibits pharmacy benefit managers from using spread pricing as a form of compensation in contracts for pharmacy benefits management services with carriers, health benefits plans, and pharmacies. Spread pricing is when a pharmacy benefits manager charges a health benefits plan or carrier a contracted price for a prescription drugs, and the contracted price for the prescription drugs differs from the amount the pharmacy benefit manager directly or indirectly pays the pharmacy. The bill bans the use of spread pricing by a pharmacy benefit manager, and it restricts a pharmacy benefit manager from entering into a contract to provide pharmacy benefits management services unless the contract provides that the pharmacy benefits manager remits 100 percent of rebates, fees, alternative discounts, and other remuneration received from any applicable entity that are related to the utilization of drugs or drug spending under the health benefits plan to the carrier, health benefits plan, or the purchaser.
Additionally, the bill provides that a pharmacy benefit manager is required to submit to the Department of Banking and Insurance financial statements prepared as of the close of its fiscal year within 120 days after the close of the fiscal year, and that the department will conduct an audit of those statements. Further, the bill provides that the commissioner may require the submission of these reports on a monthly or other periodic basis.
Finally, on an annual basis starting one year following the date of enactment, the bill requires the department to submit a report to the Governor and the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), with all personal identifying information removed, on the compensation and pricing, and financial statements of pharmacy benefit managers, and how, if at all, that compensation and pricing impacts the cost of health benefits plans to covered persons. The bill requires the report to be available to the public on the department's website.
