Senate Commerce Committee Statement to Senate, No. 1423 — State of New Jersey (February 11, 2021)

Summary

A Senate Commerce Committee statement to the Senate on Senate Bill No. 1423 with committee amendments, State of New Jersey, dated February 11, 2021, reporting the bill favorably. As amended, the bill requires carriers to pass prescription drug savings on to consumers. Compensation a pharmaceutical manufacturer pays a pharmacy benefits manager from negotiating a reduced price, in relation to a contract with a carrier, is to be remitted to the carrier and used to lower premiums or remitted to the covered person at the point of sale. Carriers must file an annual report with the commissioner showing compliance, and "compensation" excludes any performance compensation agreement paid by a manufacturer, developer or labeler.

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SENATE COMMERCE COMMITTEE

STATEMENT TO

SENATE, No.
1423

with
committee amendments

STATE
OF NEW JERSEY

DATED: FEBRUARY
11, 2021

The
Senate Commerce Committee reports favorably and with committee amendments
Senate Bill No. 1423.

As
amended, this bill requires carriers to pass prescription drug savings on to
consumers. The bill provides that all compensation paid by a pharmaceutical
manufacturer to a pharmaceutical benefits manager as a result of negotiations
of a reduced price for a pharmaceutical between a pharmacy benefits manager and
a manufacturer, in relation to a contract between a pharmacy benefits manager
and a carrier related to its insured prescription drug benefits, shall be
remitted to and retained by the carrier and must be used by the carrier to
lower the premium for covered persons under the carrier’s health benefits plan
or to allow for remittance directly to the covered person’s at the point of
sale to reduce the insured’s out of pocket costs.

In
addition, the bill provides that a carrier shall annually file with the
commissioner a report demonstrating how the carrier has complied with the
provisions of the bill.

Under
the bill, “compensation” is defined as any direct or indirect financial
benefit, but excludes any performance compensation agreement paid by a
manufacturer, developer or labeler.

COMMITTEE AMENDMENTS:

The committee amended the bill to:

1) revise the definition of “compensation;”

2) clarify that the contract addressed in the bill
between pharmacy benefit managers and carriers relates to the prescription drug
benefits of covered persons;

3) permit a carrier to remit compensation received
by a carrier as a result of negotiations for reduced drug prices directly to a
covered person at the point of sale; and

4) adjust the effective date.

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