Now Law: Schaer & Vainieri Huttle Bill Requiring Pharmacy Benefits Managers for Medicaid Programs to Disclose Certain Information

To help reduce costs for New Jersey’s Medicaid program, a bipartisan bill sponsored by Assembly Democrats Gary Schaer and Valerie Vainieri Huttle requiring pharmacy benefits managers who provide services within the Medicaid program to disclose certain information in order to enhance transparency was signed into law Monday.

Pharmacy benefits managers (PBMs) serve as intermediaries between health insurance plans, prescription drug manufacturers and pharmacies – working to negotiate lower drug prices and process prescription claims.

However, some PBMs engage in ‘spread pricing,’ which is when they charge health insurance companies a higher price than what they paid to the pharmacy for a drug, since the PBM does not currently have to disclose how much was paid to the pharmacy for that medicine.

Under the law (formerly bill A-1259/S-249), PBMs providing services under the Medicaid program will be required to disclose information to the New Jersey Department of Human Services regarding the sources/amounts of income, payments, and financial benefits they receive to provide services on behalf of health plans. This includes, but is not limited to, any pricing discounts, credits, rebates or reimbursements they receive.

PBMs will also be required to disclose any ingredient costs, dispensing fees or other similar payments made to a pharmacy, as well as their payment model for administrative fees. Information submitted to the department will be confidential and not subject to public disclosure.

Upon the bill becoming law, Assembly sponsors Schaer (D-Bergen, Passaic) and Vainieri Huttle (D-Bergen) issued the following joint statement:

“Without transparency in our state regarding PBM pricing, health insurance plans like Medicaid may be charged far more than necessary to provide residents with the prescriptions they need. Requiring PBMs to disclose payments and benefits they receive for their services, how they implement fees, and more will help our state gain a better understanding of just how prevalent spread pricing is. From there, we can make more informed decisions about how to be more efficient and reduce health care costs on behalf of the more than 1.4 million residents covered by Medicaid.” 

The act takes effect immediately.