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Coughlin, Mukherji, Benson, Downey and Houghtaling’s Prescription Drug Patient Protection Act Clears Assembly

Legislation Requires Pharmacy Benefits Managers to Obtain Certificate from DOBI to Operate in NJ

(TRENTON) – Legislation sponsored by Assembly Democrats Craig Coughlin, Raj Mukherji, Daniel Benson, Joann Downey and Eric Houghtaling to ensure pharmacy benefits managers are vetted by New Jersey Department of Banking and Insurance before operating in the state was approved Thursday by the Assembly.
The bill (A-4676), entitled the “Prescription Drug Patient Protection Act,” requires pharmacy benefits managers to obtain, in accordance with the bill’s provisions, a certificate of authority form the Commissioner of Banking and Insurance in order to operate in this state.
A pharmacy benefit manager (PBM) is a third-party administrator of prescription-drug programs for end payers, such as private insurers, and Medicare Part D plans. The sponsors of the bill note a number of complaints about PBMS driving up costs and the purpose of this bill is to provide transparency, accountability and potentially lower costs to consumers.
“The state must ensure patient protection when dealing with third-party pharmacy benefit managers,” said Coughlin (D- Middlesex). “With the rise in the cost of healthcare and the price of prescriptions, we must do all that we can to ensure residents are not being taken advantage of by anyone raising the prices of the prescriptions they need unnecessarily.”
“New Jersey law protects access to prescription drugs by seniors and other patients with its any willing provider laws, but recently history reveals that third-party PBMs on behalf of insurance companies have sought to circumvent those consumer protections,” said Mukherji (D-Hudson). “This legislation ensures that any pharmacy benefits manager operating in our state is approved to do so and understands the regulations applicable to their dealings.”

“Requiring PBMs to apply, register and be reviewed by the state before operating ensures the state’s ability to keep track of pharmacy benefit managers in the state and act on any complaints made about services,” said Benson (D- Mercer, Middlesex). “This pro-consumer legislation will help to protect the many residents who use third-party pharmacy benefits managers from unscrupulous dealings.”
“Prescriptions drug prices continue to escalate in the country,” said Downey (D-Monmouth). “Residents who need life-saving medications should not be subject to extra costs imposed as a result of having to work with a third-party pharmacy benefits manager. The state should also be aware of every PBM that operates in this state and how they deal with New Jersey patients.”
“The state must ensure that nothing impedes patient access to the medications required by their doctor,” said Houghtaling (D-Monmouth). “This legislation would provide increased transparency and accountability for all pharmacy benefit managers operating in this state. It is critical to patient protection in New Jersey.”
The bill requires a pharmacy benefits manager operations in this state on the bill’s effective date to submit an application for a certificate of authority, within nine months of that date, on a form in a manner to be prescribed by the Commissioner of Banking and insurance by regulation. A pharmacy Benefits manager that seeks to begin working in New Jersey after the bill’s effective date must also submit an application.
The bill would also require the commissioner to issue a certificate of authority to a pharmacy benefits manager if, in the determination of the commissioner, the application demonstrates that the pharmacy benefits manager:
(1) will provide pharmacy benefits management services in compliance with the provisions of the bill and applicable law;
(2) will provide a complaint resolution mechanism that includes reasonable procedures for the resolution of complaints by pharmacists, prescribers, and covered persons;
(3) is financially sound and may reasonably be expected to meet its obligations to purchasers and covered persons;
(4) has a procedure to establish and maintain a uniform system of cost accounting approved by the commissioner and a uniform system of reporting and auditing, which meet the requirements of the commissioner; and
(5) has adopted procedures to ensure compliance with all State and federal laws governing the confidentiality of its records with respect to pharmacists, prescribers, and covered persons.
Under the bill, if the commissioner rejects an application by a pharmacy benefits manager for a certificate of authority, the commissioner would be required to specify in what respect the application fails to comply with the requirements for certification.
If the commissioner revokes a certificate of authority for a pharmacy benefits manager, the pharmacy benefits manager would be required to proceed, immediately following the effective date of the order of revocation, to pay all outstanding pharmacy benefits claims of covered persons and would not be permitted to conduct any further business except as may be essential to the orderly conclusion of the affairs of the pharmacy benefits manager. The commissioner may permit such further operation of the pharmacy benefits manager as the commissioner may find to be in the best interest of the purchaser of pharmacy benefits management services and covered persons.
A certificate of authority issued pursuant to the bill would be valid for three years from the date of issuance by the commissioner, and would be required to be renewed every three years thereafter.
The commissioner would establish fees for an application for a certificate of authority and for a renewal of a certificate of authority, the amounts of which would not be permitted to be greater than is reasonably necessary to enable the Department of Banking and Insurance to carry out the provisions of the bill.
The provisions of the bill would not apply to a pharmacy benefits manager that is an affiliate of a carrier and provides pharmacy benefits management services solely to that carrier. The bill would take effect on the 90th day next following enactment.