ASSEMBLY FINANCIAL INSTITUTIONS AND INSURANCE COMMITTEE

STATEMENT TO

[Second Reprint]

ASSEMBLY, No. 4953

with committee amendments

STATE OF NEW JERSEY

DATED: DECEMBER 11, 2025

      The Assembly Financial Institutions and Insurance Committee reports favorably and with committee amendments Assembly Bill No. 4953 (2R).

      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 the State Health Benefits Program, School Employees’ Health Benefits Program, or 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.

      The bill stipulates that a 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 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).

      The bill also stipulates that a carrier may not engage in differential payment pricing.  A pharmacy benefits manager is required to reimburse all contracted pharmacies at the same rate regardless of ownership or affiliation.  Additionally, pharmacy benefits managers will be prohibited from denying a pharmacy or pharmacist the right to participate as a contract pharmacy if the pharmacy or pharmacist agree to the terms and conditions established by the carrier, pharmacy benefits manager, health plan, or other administrator’s network.

      The bill further stipulates that a pharmacy benefits manager will be prohibited from:

      (1)  requiring a covered person to use a pharmacy, including a mail-order or specialty pharmacy, in which the pharmacy benefits manager or its affiliate maintains an ownership interest or control; or

      (2)  offering or implementing a plan design that encourages a covered person to use a pharmacy, including a mail-order or specialty pharmacy, in which the pharmacy benefits manager or an affiliate maintains an ownership interest or control.

      Finally, under the bill, a pharmacy benefits manager is prohibited from providing a recommendation, advice, or counsel concerning the inclusion of a prescription drug in a formulary system, or in a particular tier of the formulary system, that 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, if the recommendation, advice, or counsel is based solely on the cost of the prescription drug and not on another factor.

COMMITTEE AMENDMENTS:

      The committee amended the bill to:

      (1)  provide that certain disclosures and flat fee compensation arrangements that are required for pharmacy benefits managers be applied to contracts between a pharmacy benefits manager and the State Health Benefits Program or School Employees’ Benefit Program;

      (2)  remove the term “commercial market plan;”

      (3)  provide that a pharmacy benefits manager has a fiduciary duty to act, in connection with a contract, in the best interests of the State Health Benefits Program and School Employees’ Health Benefits Program;

      (4)  provide that subscribers, enrollees, or covered persons do not have a private right of action against a pharmacy benefits manager that violates their fiduciary duty to act in the best interest of carriers, the State Health Benefits Program, and School Employees’ Health Benefits Program;

      (5)  remove the requirement that a pharmacy benefits manager reimburse, for a prescription drug, 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;

      (6)  prohibit pharmacy benefits managers from providing certain recommendations, advice, or counsel concerning the inclusion of prescription drugs in a formulary system;

      (7)  clarify language concerning differential payment pricing;

      (8)  prohibit a pharmacy benefits manager from denying a pharmacy or pharmacist the right to participate as a contract pharmacy under a policy or plan under certain conditions; and

      (9)  prohibit a pharmacy benefits manager from requiring or influencing a covered person to use a pharmacy that the pharmacy benefits manager or affiliate of the pharmacy benefits manager owns or maintains an ownership interest in.