New law will make prescription drugs more affordable and transparent

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Under a new law signed by Gov. Phil Murphy on Friday, prescription drug costs will be more affordable and transparent by eliminating controversial practices known as clawbacks and gag clauses.

The bill prohibits pharmacy benefit managers, the middleman that manage the prescription drug part of health insurance plans, from charging a copay that exceeds a drug’s cash price and keeping the difference—a practice called clawbacks. It also removes gag clauses that prevented pharmacists from telling their customers about lower price options.

“Pharmacy benefit managers have been holding consumers and pharmacists hostage. This law will do away with the games,” said Assemblyman Ron Dancer, R-12th District, a sponsor of Senate Bill 2690/Assembly Bill 3993/Assembly Bill 2214. “Patients who need prescriptions for their health should not be subjected to profit-motivated deception.”

Dancer said that the deck is stacked against prescription users who have no idea this is going on.

“The gag clause prohibits the pharmacists from informing their customers of this scheme. That’s not acceptable. Nobody should pay more for required drugs because they are insured,” said Dancer.

Under the new law, pharmacists are now required to tell people how much their prescriptions cost, including cheaper options to purchase without insurance. It also directs the Division of Consumer Affairs to develop a public awareness campaign on prescription costs and consumer rights.

New Jersey joins more than 30 states that have enacted laws prohibiting gag clauses and at least 20 others that outlaw copay clawbacks.