Sponsored by:
Assemblyman ROY FREIMAN
District 16 (Hunterdon, Mercer, Middlesex and Somerset)
SYNOPSIS
Requires DOBI to conduct audits of payments made by pharmaceutical manufacturers to pharmacy benefits managers and affiliates.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning audits of payments made by pharmaceutical manufacturers to pharmacy benefits managers and supplementing P.L.2023, c.107 (C.17B:27F-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. The Department of Banking and Insurance shall conduct audits of all compensation paid to pharmacy benefits managers and affiliates thereof from pharmaceutical manufacturers, with the cost of the audit to be paid by the pharmacy benefits manager being audited. Upon notification from the department of an audit, a pharmacy benefits manager shall have 30 days to provide all documentation requested. The commissioner shall determine the number of audits to be conducted each year and the time period of review for each audit, except that an audit time period shall not exceed one calendar year in duration.
b. An audit conducted pursuant to this section shall include, but not be limited to, a review of the following:
(1) any compensation provided by a pharmaceutical manufacturer to a pharmacy benefits manager within the timeframe specified;
(2) the involvement of any group purchasing organization in the negotiation of compensation between a pharmaceutical manufacturer and a pharmacy benefits manager; and
(3) any additional information deemed relevant and appropriate by the commissioner.
c. A pharmacy benefits manager that fails to submit the required documentation in a timely manner shall be subject to a civil administrative penalty in an amount not less than $1,000 nor more than $10,000 for each day the pharmacy benefits manager is in violation of this act. The penalty may be recovered in a summary proceeding pursuant to the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.). d. As used in this section:
“Compensation" means any direct or indirect financial benefit, including, but not limited to, rebates, discounts, credits, fees, grants, chargebacks or other payments or benefits of any kind, that is attributed to, directly or indirectly, the utilization of a health benefits plan or enrollment in a health benefits plan, regardless of how the benefits are otherwise characterized by a pharmacy benefits manager and relevant third parties.
“Group purchasing organization” means an entity that combines the purchasing volume of multiple businesses or healthcare providers to negotiate prices and contract terms with manufacturers, distributors, and vendors. “Group purchasing organization” shall include rebate aggregators, which negotiate rebates with drug manufacturers on behalf of the pharmacy benefits managers and hold the contracts that govern those rebates.
2. This act shall take effect on the first day of the fourth month next following enactment, except that the Commissioner of Banking and Insurance may take any anticipatory administrative action in advance as shall be necessary for the implementation of this act.
STATEMENT
This bill requires the Department of Banking and Insurance to conduct audits of all compensation paid to pharmacy benefits managers and affiliates thereof from pharmaceutical manufacturers, with the cost of the audit to be paid by pharmacy benefits manager being audited. The bill provides that a pharmacy benefits manager will have 30 days to provide all documentation requested upon notification from the department of an audit. The commissioner is required to determine the time period of review for each audit, except that an audit time period may not exceed one calendar year in duration, and the amount of audits conducted each year by the department.
The bill requires the audit to include, but not be limited to, a review of the following:
(1) any compensation provided by a pharmaceutical manufacturer to a pharmacy benefits manager within the timeframe specified;
(2) the involvement of any group purchasing organization, including any rebate aggregator, in the negotiation of compensation between a pharmaceutical manufacturer and a pharmacy benefits manager; and
(3) any additional information deemed relevant and appropriate by the commissioner.
Under the bill, a pharmacy benefits manager that fails to submit the required documentation in a timely manner will be subject to a civil administrative penalty in an amount not less than $1,000 nor more than $10,000 for each day the pharmacy benefits manager is in violation of the bill’s provisions. The bill defines “compensation” to mean any direct or indirect financial benefit, including, but not limited to, rebates, discounts, credits, fees, grants, chargebacks or other payments or benefits of any kind, that is attributed to, directly or indirectly, the utilization of a health benefits plan or enrollment in a health benefits plan, regardless of how the benefits are otherwise characterized by a pharmacy benefits manager and relevant third parties.