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Senate Commerce Committee Statement to Senate, No. 1616 (State of New Jersey, March 14, 2022)

Summary

This is the Senate Commerce Committee Statement to Senate, No. 1616, State of New Jersey, dated March 14, 2022. The committee reports favorably Senate Bill No. 1616, which sets new transparency standards for pharmacy benefits manager (PBM) business practices. The bill requires PBMs to apply for a license with the Department of Banking and Insurance every three years and requires carriers to ensure that a PBM under contract owes a fiduciary duty to the carrier. It also mandates that carriers and PBMs establish pharmacy and therapeutics committees free from conflicts of interest, and says PBM compensation constitutes an administrative cost when calculating a carrier's anticipated loss ratio. As reported, the bill is identical to the Assembly Committee Substitute for Assembly Bill Nos. 536 and 2841.

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“Senate Commerce Committee Statement to Senate, No. 1616 (State of New Jersey, March 14, 2022).” Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2022-03-14-scm-s1616-s1-1ab1f6fe74/, SHA-256 87c049b24cd8fb70eec4d77f3fc9b62ccaa455a7f80b4fa5a4e3ec85539f11c9.

Full text

     SENATE COMMERCE COMMITTEE

                   STATEMENT TO

                 SENATE, No. 1616

 STATE OF NEW JERSEY
                    DATED: MARCH 14, 2022

   The Senate Commerce Committee reports favorably Senate Bill
No. 1616.
   This bill sets new transparency standards for pharmacy benefits
manager (PBM) business practices. Specifically, the bill concerns
the licensing and reporting requirements of a carrier or a PBM. The
bill requires that PBMs apply for a license with the Department of
Banking and Insurance every three years and requires carriers to
ensure that a PBM under contract with the carrier owes a fiduciary
duty to the carrier. Carriers are to maintain detailed records of
transactions and submit annual documentation showing that any
compensation remitted by a manufacturer, developer, or labeler to a
carrier or PBM was either remitted directly to the covered person at
the point of sale to reduce out of pocket expenses or used to offset
premium costs for future plan years. Additionally, the bill mandates
that carriers and PBMs establish pharmacy and therapeutics
committees that are free from conflicts of interest and use one or
more formularies. For the purposes of calculating a carrier’s
anticipated loss ratio, PBM compensation constitutes an
administrative cost rather than a benefit.
    As reported, this bill is identical to the Assembly Committee
Substitute for Assembly Bill Nos. 536 and 2841, as adopted and
reported by the Assembly Financial Institutions and Insurance
Committee on this date.

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