With the goal of strengthening the transparency of transactions between pharmacies and pharmacy benefits managers – who help negotiate drug purchases for insurers and buyers – a measure to prohibit after-the-fact changes in payments owed to pharmacies was signed into law on Friday.
Assembly Bill 3717 is intended to limit the ability of PBMs to reduce payments retroactively on a properly filed claim by a pharmacy, and more generally creates mechanisms for greater transparency of PBM compensation programs.
“PBMs leveraging their position in the supply chain to unfairly claw back money from pharmacists has contributed to rising prices of prescription medication for countless New Jersey families and seniors,” Assembly sponsors of the bill Raj Mukherji, D-33rd District; Joann Downey, D11th District; and Eric Houghtaling, D-11th District said in a joint statement. “Due to the lack of transparency in PBM negotiations, many pharmacies are now saddled with retroactive fees charged months after claims were initially made. This unpredictability has forced pharmacies to make a choice. Raise prices, which means passing costs onto consumers, or close up shop, which leaves communities underserved.”
Gerard Bargoud, pharmacist and owner of Boyt Drugs in Metuchen, told NJBIZ that he is pleased with the legislation because it will help keep independent pharmacies from going out of business. “It will prevent PBMs from taking imaginary fees,” said Bargoud.
As of May 2019, 33 state legislatures have enacted laws regulating the role of PBMs; Montana, New Mexico and Wyoming being the most recent among them.
In July of 2019, similar legislation concerning PBMs advanced through the U.S. Senate Finance Committee and now awaits further federal action.