By Vin Gopal

The withdrawal of safeguards against overpricing by Pharmacy Benefit Managers (PBM) from the last-minute federal budget bill makes it imperative that we press hard to pass our bill in the state legislature to control PBM’s pricing policies.

PBMs, which serve as an intermediary between pharmacists, employers, and insurers to ensure the most cost-effective medication routes, are ostensibly obligated to negotiate discounts for generic drugs to make them more affordable. When they fail to meet their obligations, the resulting higher drug costs affect everyone, but hit seniors and people with low incomes the hardest. 

In recent years, drug pricing has escalated at unprecedented rates. Restrictive practices that segregate certain drug types and disadvantage patients’ choice and access are contributing factors, particularly in Medicaid programs. According to evaluation data in the Governor’s Budget Recommendations, total Medicaid prescription drug spending increased by approximately $700 million, from $2.1 billion in FY 2019 to $2.8 billion in FY 2024. 

A New York Times investigation last summer suggested PBMs are overcharging New Jersey patients and pharmacies, threatening their access to medications that are critical to their healthcare. When state health benefits programs and Medicaid are being taken advantage of by PBMs or charged increasingly high premiums, the taxpayers are footing the cost for the PBMs’ private gain. 

Our sponsored legislation would establish the "Equitable Drug Pricing and Patient Access Act". To prevent pharmacy closures, known as pharmacy deserts, and maintain patient access to pharmacies, our bill would require the reimbursement rate for prescription drug services paid to a pharmacy that is providing them to a Medicaid beneficiary at no less than the national average drug acquisition cost. 

To prevent PBMs from overcharging patients, taxpayers and the state for prescription drugs in the Medicaid program, the pending bill amendments would prohibit pricing discrimination in the Medicaid program. Managed Care Organizations and their PBMs would be required to reimburse all contracted pharmacies at the same rates regardless of ownership or affiliation, preventing PBMs from overpaying pharmacies they are affiliated with or own. This provision alone will save hundreds of millions of dollars.

The removal of a provision in the original federal budget stopgap legislation, which had bipartisan support, took away a requirement that PBMs pass along any discounts or rebates they negotiated to employer-sponsored plans. The package also would have imposed extensive reporting requirements on employers' PBM and stopped PBMs from taking advantage of taxpayers and seniors. 

Ensuring access to healthcare is a top priority for our Legislative District 11 office and regulating PBMs and their impact on the cost of drugs has been a core initiative of the legislature. Last year, we passed a historic package of bills to make prescription medications more affordable, which included a law to tighten rules for PBMs. That legislation mandated transparency and disclosure for lower-cost prescription options, prohibited overcharging, and strengthened regulations for contracts between PBMs and pharmacies. It also set penalties for violations and established licensing requirements and stringent reporting obligations.

We introduced our current legislation to create the Equitable Drug Pricing and Patient Access Act in the Senate last fall and it is pending before the Senate, Referred to the Senate Health, Human Services and Senior Citizens Committee. 

We believe that ensuring that Medicaid establishes the Equitable Drug Pricing and Patient Access Act will provide greater transparency and cost management within the program to reduce waste and cost increases. In doing that, we will ensure that residents can afford the drugs they rely on to maintain good health.

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