A 1502 — Creates "Patient and Provider Protection Act."*

Summary

Patient and Provider Protection Act-concerns

Bill Text

AI-generated reading aid from the bill's amendatory text — verify against the official bill.

This bill amends 6 section(s) of the New Jersey statutes: N.J.S.A. 17B:27F-1; N.J.S.A. 17B:27F-2; N.J.S.A. 17B:27F-3.1; N.J.S.A. 17B:27F-4; N.J.S.A. 17B:27F-6; N.J.S.A. 45:14-82.4.

• N.J.S.A. 17B:27F-1

  : a. ; b. c. 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., ⟦INS⟧For the purposes of P.L. , c. (C. ) (pending before the Legislature as this bill), "health benefits plan" shall include the State Medicaid program established pursuant to P.L.1968, c.413 (C.30:4D-1 et seq.), the State Health Benefits Program, and the School Employees' Health Benefits Program.⟦/INS⟧ a contract with compensation ⟦INS⟧fee⟦/INS⟧ the difference between: (1) the amount of payments made by a carrier of a health benefits plan to its pharmacy benefits manager; and (2) the value of payments made by the pharmacy benefits manager to dispensing pharmacists for the provision of prescription drugs or pharmacy services with regard to pharmacy benefits covered by the health benefits plan ⟦INS⟧a payment that covers the cost of providing one or more pharmacy benefits management services and does not exceed the value of the service or services actually performed by the pharmacy benefits manager⟦/INS⟧ 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 → "Affiliated pharmacy" means a contract pharmacy that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with a pharmacy benefit manager. or an intermediary, including but not limited to, , including rebate aggregators 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., For the purposes of P.L. , c. (C. ) (pending before the Legislature as this bill), "health benefits plan" shall include the State Medicaid program established pursuant to P.L.1968, c.413 (C.30:4D-1 et seq.), the State Health Benefits Program, and the School Employees' Health Benefits Program. "Manufacturer" means an entity that creates, makes, or produces drugs by compounding, growing, or other process. This definition shall apply to persons engaged in the drug manufacturing business who do not maintain a manufacturing location in this State. "Manufacturer" shall not apply to licensed pharmacies or to licensed professional individuals such as, but not limited to, pharmacists, physicians, dentists, or veterinarians when engaged in the lawful pursuit of their professions. an intermediary, including but not limited to, fee compensation a payment that covers the cost of providing one or more pharmacy benefits management services and does not exceed the value of the service or services actually performed by the pharmacy benefits manager the difference between: (1) the amount of payments made by a carrier of a health benefits plan to its pharmacy benefits manager; and (2) the value of payments made by the pharmacy benefits manager to dispensing pharmacists for the provision of prescription drugs or pharmacy services with regard to pharmacy benefits covered by the health benefits plan : (1) negotiating the price of prescription drugs, including negotiating and contracting for direct or indirect rebates, discounts, or other price concessions; (2) managing any aspects of a prescription drug benefit, including but not limited to, the processing and payment of claims for prescription drugs, the performance of utilization review, the processing of drug prior authorization requests, the adjudication of appeals or grievances related to the prescription drug benefit, contracting with network pharmacies, controlling the cost of covered prescription drugs, managing data relating to the prescription drug benefit, or the provision of services related thereto; (3) performing any administrative, managerial, clinical, pricing, financial, reimbursement, data administration or reporting, or billing service; and (4) any other services as the department may define pursuant to rule or regulation "Rebate aggregator" means a person or entity that provides formulary management and formulary rebate administrative services, or aggregates prescription drug utilization volume and distributes rebates to pharmacy benefit managers, or both. "Spread pricing" means the model of prescription drug pricing in which the pharmacy benefits manager or an affiliated intermediary, including a rebate aggregator, charges a health benefits plan, carrier, or purchaser a contracted price for prescription drugs, and the contracted price for the prescription drugs differs from the amount the pharmacy benefits manager directly or indirectly pays the pharmacist or pharmacy.

  amended

• N.J.S.A. 17B:27F-2

  a. and Additionally, a pharmacy benefits manager shall: or pharmacy or → a. ; and (4) provide a reasonable administrative appeal procedure, including a right to appeal in accordance with section 4 of P.L.2015, c.179 (C.17B:27F-4), to allow pharmacies with which the carrier or pharmacy benefits manager has a contract to challenge maximum allowable costs for a specified drug Upon execution or renewal of each contract, or at such a time when there is any material change in the term of the contract, a pharmacy benefits manager shall, with respect to contracts between a pharmacy benefits manager and a carrier: and concerning reimbursements binding c. The binding arbitration shall adhere to the following requirements: (1) the party requesting arbitration shall notify the other party that arbitration has been initiated and state its final offer before arbitration; (2) arbitration shall be initiated by filing a request with the department; (3) the arbitration shall consist of a review of the written submissions by both parties, which shall include the final offer for the payment; and (4) the arbitrator's decision shall be one of the two amounts submitted by the parties as their final offers and shall be binding on both parties. The decision of the arbitrator shall include detailed written findings and shall be issued within 30 days after the request is filed with the department. The detailed written findings shall be an analysis of the decision including, but not limited to, information concerning any databases, previous awards, or other documentation or arguments that contributed to the arbitrator's decision. The arbitrator's expenses and fees shall be split equally among the parties except in situations in which the arbitrator determines that the payment made by the pharmacy benefits manager was not made in good faith, in which case the pharmacy benefits manager shall be responsible for all the arbitrator's expenses and fees. Each party shall be responsible for its own costs and fees, including legal fees if any. d. (1) The department may adopt rules and regulations governing the arbitration process, including setting minimum qualifications and conflict standards for arbitrators; establishing arbitration fees and minimum dispute thresholds for arbitration; and prohibiting bundling multiple disputes to meet such thresholds. (2) Arbitration outcomes shall be reported to the department. e. Nothing in this section shall be construed to diminish the department's oversight or authority over licensed pharmacy benefits managers.

  amended

• N.J.S.A. 17B:27F-3.1

  good faith and fair dealing in Any funds received by the pharmacy benefits manager through spread pricing shall be subject to this subsection. the same duty to as the health benefits plan or carrier for whom it is 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 3. 4. compensation compensation compensation compensation compensation ⟦INS⟧or⟦/INS⟧ and → a duty of good faith and fair dealing with the in fiduciary duty to act in the best interests of a carrier with which it contracts to allow that carrier to design plans in a manner that reduces premiums and out-of-pocket costs paid by covered persons. (3) 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 5. c. A pharmacy benefits manager shall not provide recommendation, advice, or counsel to a plan sponsor or carrier concerning the inclusion of a prescription drug in a formulary system, or in a particular tier of the formulary system, that places a prescription drug with a higher cost to the patient, including but not limited to coinsurance, copayments, deductibles, and other cost-sharing, in a more favorable position than a generic or biosimilar prescription drug with a lower cost, if the recommendation, advice, or counsel is based solely on the cost of the prescription drug and not on another factor. d. The provisions of this section shall apply to contracts between a pharmacy benefits manager and the State Health Benefits Program or School Employees' Health Benefits Program. 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. 6. fee fee fee fee fees e. No pharmacy benefit manager may derive income from pharmacy benefits services provided to a carrier or health benefits plan in this State except for income derived from a pharmacy benefits manager fee. The amount of any pharmacy benefits manager fees shall be set forth in the agreement between the pharmacy benefits manager and the carrier or health benefits plan. f. The pharmacy benefits manager fee charged or paid to a pharmacy benefits manager from a carrier or health benefits plan shall not be directly or indirectly based or contingent upon: (1) the acquisition cost or any other price metric of a drug; (2) the amount of savings, rebates, or other fees charged, realized, or collected by or generated based on the activity of the pharmacy benefits manager; or (3) the amount of premiums, deductibles, or other cost sharing or fees charged, realized, or collected by the pharmacy benefits manager from patients or other persons on behalf of a patient. g. Upon request by the department or a purchaser, a pharmacy benefits manager shall disclose to the department or purchaser the amount of any fees paid by the pharmacy benefits manager to a third party broker. h. Subsections e. and f. of this section shall also apply to a contract between a pharmacy benefits manager and the State Health Benefits Program or , the School Employees' Health Benefits Program , or the State Medicaid program established pursuant to P.L.1968, c.413 (C.30:4D-1 et seq.) . i. Each pharmacy benefits manager authorized to operate in this State pursuant to P.L.2015, c.179 (C.17B:27F-1 et seq.) shall certify to the commissioner, by December 31st of each year, that the pharmacy benefits manager has fully and completely complied with the requirements of this section during the prior calendar year. Each certification submitted pursuant to this subsection shall be signed by the chief executive officer or chief financial officer of the pharmacy benefits manager. j. As used in this section, "pharmacy benefits manager fee" means a payment that covers the cost of providing one or more pharmacy benefits management services and shall not exceed the bona fide value of the itemized service or services actually performed by the pharmacy benefits manager on behalf of the carrier or health benefits plan that the carrier or health benefits plan would otherwise perform or contract for in the absence of

  amended

• N.J.S.A. 17B:27F-4

  intermediaries, including a rebate aggregator, and f. Any dispute regarding the determination of an appeal conducted pursuant to this section may be referred to binding arbitration conducted in a manner consistent with the provisions of subsection b. of section 2 of P.L.2015, c.179 (C.17B:27F-2). The Commissioner of Banking and Insurance shall contract with a nationally recognized, independent organization that specializes in arbitration to conduct the arbitration proceedings.

  amended

• N.J.S.A. 17B:27F-6

  d. 5 (C.17B:27F-5) → A pharmacy benefits manager, in connection with any contract or arrangement with a carrier, health benefits plan, or prescription benefit plan, shall not: (1) transfer or share records relative to prescription information containing patient-identifiable or prescriber-identifiable data to an affiliated pharmacy for any commercial purpose; provided, however, that nothing in this paragraph shall be construed to prohibit the exchange of prescription information between a pharmacy benefits manager and an affiliated pharmacy for the limited purposes of providing or administering pharmaceutical benefit services for a covered person, providing pharmacy reimbursement, engaging in formulary compliance, or conducting permitted utilization review; (2) knowingly make a misrepresentation to a covered person, pharmacist, or pharmacy; (3) charge a fee to a pharmacy in connection with network enrollment; (4) remove a drug from a formulary or deny coverage of a drug for the purpose of incentivizing a covered person to seek coverage from a different health benefits plan; (5) require a covered person to utilize an affiliate pharmacy or otherwise offer or implement a plan design that encourages a covered person to use an affiliated pharmacy unless the pharmacy benefits manager can show that the pharmacy delivers lower costs or higher quality services to covered persons; or (6) withhold coverage or require prior authorization for a lower cost, therapeutically equivalent drug available to a covered person or fail to reduce a covered person's cost sharing amount when a covered person selects a lower cost, therapeutically equivalent drug. d. or c. e. 10 (C.17B:27F-10)

  amended

• N.J.S.A. 45:14-82.4

  and → ; and (6) the fee structures agreed to between a pharmacy benefits manager and the carriers and health benefits plan with which it contracts

  amended

Action History

1. October 05, 2026

   REF SBA

2. October 05, 2026

   REP/SCA 2RS

3. May 18, 2026

   R/S REF SCM

4. May 18, 2026

   PA

5. May 14, 2026

   REP/ACA 2RA

6. March 19, 2026

   REP/ACS REF AAP

7. January 13, 2026

   INT 1RA REF AFI

Sponsors

• Roy Freiman · Primary
• Louis D. Greenwald · Primary
• Gary S. Schaer · Primary
• Dan Hutchison · Primary
• Luanne M. Peterpaul Esq. · Primary
• Alexander Schnall · Primary
• Sterley S. Stanley · Primary
• Heather Simmons · Primary
• Verlina Reynolds-Jackson · Cosponsor
• Balvir Singh · Cosponsor
• Michael Venezia · Cosponsor
• Annette Quijano · Cosponsor
• Clinton Calabrese · Cosponsor
• Anthony Angelozzi · Cosponsor
• Robert J. Karabinchak · Cosponsor
• Ellen J. Park · Cosponsor
• William B. Sampson IV · Cosponsor
• Katie Brennan · Cosponsor
• Tennille R. McCoy · Cosponsor
• William F. Moen Jr. · Cosponsor
• Carol A. Murphy · Cosponsor
• Anthony S. Verrelli · Cosponsor

Votes

Subjects