ASSEMBLY FINANCIAL INSTITUTIONS AND INSURANCE COMMITTEE

STATEMENT TO

[First Reprint]

ASSEMBLY, No. 4953

with committee amendments

STATE OF NEW JERSEY

DATED:  JUNE 19, 2025

      The Assembly Financial Institutions and Insurance Committee adopts amendments to Assembly Bill No. 4953 (1R).

      As amended, this bill, the “Patient and Provider Protection Act,” establishes certain requirements for pharmacy benefits managers relating to contractual agreements with manufacturers and pharmacies.      Under the bill, pharmacy benefits managers have a fiduciary duty to act in the best interests of a carrier with which it contracts.  In addition, pharmacy benefits managers are prohibited from engaging in any marketing activity that uses inaccurate or misleading information to convince or attempt to convince covered persons to use a contracted or network pharmacy.  Furthermore, the bill stipulates that an agreement between a pharmacy benefits manager and a manufacturer is not valid if the contract conditions any rebate on the exclusion of generic drugs from coverage.

      As amended, the bill stipulates that a commercial market plan contract between a pharmacy benefits manager and a contracted pharmacy or network pharmacy is, in the event of a dispute, to be presumed to be a “contract of adhesion.”  A contract of adhesion is a standardized contract in which one party has significantly superior bargaining power.  In a contractual dispute involving a contract of adhesion, the courts may subject the contract to special scrutiny.

      The bill also requires pharmacy benefits managers, for a prescription drug, to reimburse:

      (1)  a contracted pharmacy or a network pharmacy at a rate that is at least equal to the pharmacy’s cost of acquiring the prescription drug; and

      (2)  the State fee-for-service benchmark of the National Average Drug Acquisition Cost (NADAC) plus the prevailing State defined Medicaid professional dispensing fee.  If the NADAC is not established for a specific national drug code, the ingredient reimbursement rate shall default to the Wholesale Average Cost (WAC), or the Suggested Wholesale Price (SWP).

      As amended, the bill also stipulates that a carrier may not engage in differential payment pricing in commercial market plans.  A pharmacy benefits manager is required to reimburse all contracted pharmacies at the same rate regardless of ownership or affiliation.

      Under the bill, as amended, a pharmacy and therapeutics committee is to ensure that no decision concerning the inclusion of a prescription drug in a formulary system, or in a particular tier of the formulary system, places a prescription drug with a higher cost to the patient in a more favorable position than a generic or biosimilar prescription drug with a lower cost.

COMMITTEE AMENDMENTS:

      The committee amended the bill to:

      (1) specify that a commercial market plan contract between a pharmacy benefits manager and a contracted pharmacy or network pharmacy will, in the event of a dispute, be presumed to be a “contract of adhesion,” and defines commercial market plan as a health benefits plan issued by an insurance company, health service corporation, hospital service corporation, medical service corporation, or health maintenance organization in this State;

      (2) provide that a pharmacy benefits manager has a fiduciary duty to act in the best interests of a carrier with which it contracts;

      (3) require a pharmacy benefits manager, for a prescription drug, to reimburse the State fee-for-service benchmark of the National Average Drug Acquisition Cost (NADAC) plus the prevailing State defined Medicaid professional dispensing fee.  If the NADAC is not established for a specific national drug code, the ingredient reimbursement rate shall default to the Wholesale Average Cost (WAC), or the Suggested Wholesale Price (SWP);

      (4) prohibit a carrier from engaging in differential payment pricing in commercial market plans and require a pharmacy benefits manager to reimburse all contracted pharmacies at the same rate regardless of ownership or affiliation; and

      (5) clarify that a pharmacy and therapeutics committee will ensure that no decision concerning the inclusion of a prescription drug in a formulary system, or in a particular tier of the formulary system, places a prescription drug with a higher cost to the patient in a more favorable position than a generic or biosimilar prescription drug with a lower cost.