With soaring healthcare costs affecting millions of Americans – from exorbitant drug pricing to high premiums – Assembly Democrats have sponsored a bill aimed at making medical care more affordable. The Assembly Financial Institutions and Insurance Committee advanced legislation on Thursday that would require drug savings to be passed along directly to consumers.
Health insurance companies use an intermediary referred to as a pharmaceutical benefits manager (PBM) to negotiate drug pricing with pharmaceutical manufacturers on their behalf. Through bulk purchasing and other methods, PBMs are often able to negotiate lower prices with manufacturers that result in some sort of direct or indirect financial compensation, such as rebates and discounts.
The bill (A-2222) would require PBMs to pass along the entirety of those savings to insurance companies, who would then be required to pass the savings along to their consumers.
“Far too often, the financial advantages of reduced drug prices negotiated by PBMs only benefit insurance companies or PBMs themselves,” said Assemblyman John F. McKeon (D-Essex, Morris). “With more and more Americans struggling to pay for the coverage and care they need, it is simply unacceptable for any savings to be kept from consumers.”
By mandating that savings be passed directly to consumers, New Jersey residents would benefit from lower monthly costs for their insurance plans.
“The current system in place makes life-saving medicine unaffordable for many Americans,” said Assemblyman Roy Freiman (D-Somerset, Mercer, Middlesex, Hunterdon). “The focus cannot be on increasing the profit margins of PBMs – it must be on finding ways to make healthcare more accessible to our residents by reducing consumer costs. This legislation will help by lowering monthly premiums and leaving consumers with more money to spend on the medications they need.”
“It feels like we are constantly reading stories of Americans suffering significant health complications because they cannot afford health insurance or medical care,” said Assemblywoman Valerie Vainieri Huttle (D-Bergen). “We must find more ways to protect our residents and ensure that they have equitable access to treatment and care. Requiring PBMs and insurance companies to pass along savings to consumers is one way that we can help to offset rising healthcare costs.”
The bill will now head to the Assembly Speaker for further consideration.